The Trump administration is pressing the operator of the largest electricity grid in the United States to add $15bn worth of new power generation capacity and wants technology companies to help pay for it, even if they do not ultimately need the additional electricity. The proposal targets PJM Interconnection, which runs the grid serving much of the Mid-Atlantic and Midwest, as data center demand is projected to surge over the next decade.
Proposal To Fund New Generating Capacity
The White House, alongside governors from several states in the PJM region, is calling on the grid operator to hold an auction offering 15-year contracts for new power generation. Under the proposal, technology companies would be encouraged to bid on those contracts even if their data centers do not require the capacity.
The administration said the move is intended to prepare the grid for rising electricity demand, with consumption from data centers expected to nearly triple over the next ten years.
PJM said it is reviewing the administration’s “statement of principles” and will soon publish the outcome of a months-long planning process that has been examining options to add capacity to the grid.
Tensions With Grid Operator
The statement is nonbinding, and PJM has signaled limited engagement with the initiative. Jeffrey Shields, a spokesperson for PJM, told Bloomberg that the operator was not involved in the event where the proposal was to be discussed and would not be attending.
PJM Interconnection supplies power to more than 65 million people across 13 states and includes northern Virginia, one of the largest data center hubs in the world.
Rising Demand And Higher Prices
Electricity prices in the PJM region rose by about 10% to 15% in 2025 compared with the previous year. According to Monitoring Analytics, PJM’s independent market monitor, peak electricity demand has increased by roughly 10% over the past decade and is projected to grow another 6.5% by 2027.
Data centers operated by technology companies have been identified as a major driver of that growth, particularly as artificial intelligence workloads increase power consumption.
Fuel costs have also played a role. PJM relies heavily on natural gas for electricity generation, and higher gas prices have contributed significantly to rising power costs. Monitoring Analytics estimates that about 60% of the region’s 2025 price increases were driven by higher fossil fuel prices.
Challenges Of Building New Power Plants
Grid operators are facing pressure as electricity demand rises after more than a decade of little to no growth. Building new fossil fuel power plants typically takes years and requires hundreds of millions of dollars in upfront investment.
Utilities and power providers have been cautious about committing to those projects. If demand from AI and data centers slows, they risk being left with long-lived assets that may not be profitable.
Shift Toward Renewable Energy
Technology companies have largely avoided investing directly in traditional power plants. Instead, they have turned to renewable energy projects, which are cheaper, modular, and faster to deploy.
Solar power and battery storage have seen early adoption. A typical solar farm can be built in around 18 months and brought online in stages, allowing power generation to begin before construction is complete. That timeline more closely matches the pace of data center development and allows companies to limit long-term risk.
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