Data Center Demands Raise Concerns About Future Energy Costs

Energy industry experts have growing concerns about the affordability and reliability of electricity. 

PJM, the 13-state electricity grid that includes West Virginia, is currently holding its capacity auction for the 2027-2028 service year. 

According to the Federal Energy Regulatory Commission, a capacity market pays power suppliers for their commitment to meet future electricity needs. A capacity market does not pay for the energy produced but instead pays for the ability to produce power when needed.

Jon Gordon, director of the energy industry association Advanced Energy United, spoke to a Zoom presentation hosted by the Reliable Grid Project Tuesday. He said that while energy-hungry data centers are springing up on a timeline of two to three years, traditional power plants can take twice as long to build.

“PJM is really struggling to get supply in place quickly enough to meet this data center demand, which is coming fast and furious,” he said.

PJM projects 60 gigawatts of new data center load by 2030, while only 6 to 12 gigawatts of new power supply are expected to come online during the same period.

Part of the issue, according to Gordon, is a years-long interconnection queue for renewable energy projects that he said could begin to address skyrocketing demand more immediately. 

“PJM has made some incremental improvements. Things are looking a little bit better, but some of those projects have been languishing in that queue for four or five years and the economics of some of them are just not panning out now over that long time frame compared to when they first entered the queue,” Gordon said. “That’s very concerning, but we are still putting as much pressure on PJM as we can to implement reforms and try and get as much of that clean energy online as fast as possible, because that can actually provide supply relief much faster than building a new power plant.”

According to Reliable Grid Project, there are more than 1,600 new energy projects in line in PJM’s interconnection queue, totaling 167.85 GW of potential energy production.

Gordon said the increased demand comes just as a rate cap imposed after a lawsuit led by Pennsylvania Governor Josh Shapiro is set to expire, likely spiking consumer energy prices.

“We all are concerned and looking forward to the June 2026 auction and what may happen there,” Gordon said. “The PJM staff proposal in this critical issue fast path, even recommended to the board at PJM that perhaps that price cap should remain in place because there’s just so much uncertainty right now about data centers and the demand that they represent, and that’s just one mechanism to sort of ensure that this data center uncertainty doesn’t cause huge price spikes going forward.”