Some new AI data centers could face their first power cuts during PJM shortages

PJM Interconnection, the operator of the largest U.S. regional power grid, has asked federal regulators to approve a new system for handling electricity shortages. Under the proposal, some new data centers and other very large power users could be required to cut demand before broader emergency measures affect other customers.

The plan is aimed at facilities that add major new demand without bringing enough new power supply to support it. It comes as PJM faces rapidly growing electricity needs, driven largely by data centers, while recent capacity auctions have fallen short of the grid operator’s reliability requirement.

What PJM is proposing

PJM is proposing a new emergency framework called the Interim Resource Adequacy Service, or IRAS. It would apply when the grid lacks enough supply to meet its reliability target, and certain new large customers have connected without securing enough new capacity.

PJM filed the proposal with the Federal Energy Regulatory Commission on Aug. 13. The filing requests an Oct. 12 effective date, but the proposal still needs federal approval. Comments on the filing are due Sept. 3, according to the Federal Register.

The central idea is straightforward. New large loads that arrive with insufficient supporting capacity would accept a lower level of service under tight conditions. That would give grid operators another tool before they move deeper into emergency procedures that can affect more customers.

Which data centers could be affected?

PJM defines a Large Load as end-use customer demand totaling at least 50 MW at one site, including delivery points or interconnections located within a one-mile radius of that site.

Large Load megawatts not in service by June 1, 2027, are considered new. Later demand increases can also count as new Large Load megawatts when PJM’s applicable threshold is met.

New Large Loads can avoid exposure to IRAS when qualifying BYONC or when allocated RBP capacity is available. Future contracted capacity alone does not exempt load until the resource becomes fully effective.

How the power cuts would work

During a qualifying shortage, PJM would determine how much IRAS load needs to be reduced. The affected transmission owner or electric distributor would then be expected to carry out the reduction in coordination with state authorities and the individual customer.

The proposal places IRAS reductions before Pre-Emergency Load Management in PJM’s emergency sequence. Existing demand-response programs pay participating customers to reduce electricity use during periods of high grid stress. PJM says the new step could help avoid moving toward more severe emergency actions.

Facilities may be able to switch to on-site backup resources instead of shutting operations entirely, where permitted. PJM itself does not control every retail customer switch, so utilities, transmission owners, and state authorities would play important roles in implementing any reduction.

Why PJM is worried about supply

The proposal follows two capacity auctions in which PJM failed to procure enough resources to meet its full reliability requirement. In the latest auction for the 2028-29 delivery year, the grid cleared 6,831 MW below that requirement.

The auction price reached the FERC-approved cap of $325 per megawatt-day across PJM. PJM says a shortfall does not automatically mean customers will experience blackouts, but it leaves the system with a smaller cushion during periods of extreme stress.

PJM also expects large-load demand to grow sharply. Its board said new large loads could add about 70 GW by 2038, while roughly 15 GW of generation has retired in the region since 2022. That combination has increased concern about future resource adequacy.

A registry would track major loads

PJM also plans to create a Large Load Registry. Utilities and other appropriate entities would report major sites, their locations, expected demand, in-service dates, backup generation, and information about any new capacity arranged to serve them.

The registry would help PJM calculate how much new large-load demand lacks supporting supply. It would also help states, transmission owners, distributors, and regulators understand which customers could be subject to IRAS during a shortage.

PJM says information from the registry may be released publicly when confidentiality rules allow. More detailed data would be available to specified authorities and market participants, subject to safeguards. The goal is to improve forecasting and make load-reduction priorities easier to plan before an emergency arrives.

Emergency orders have already tested the idea

PJM has already explored using data-center backup generation during an emergency. In May 2026, the grid operator asked the U.S. Department of Energy for emergency authority as unusually hot weather, heavy generator outages, and high expected demand threatened reserves.

In that request, PJM projected less than 5,800 MW of reserves for the May 18 peak and said Maryland and Virginia faced particularly stressful conditions. It asked for authority to work with utilities so data centers with backup generation could shift away from grid power if needed.

The new IRAS proposal differs in that it would establish an ongoing tariff framework rather than relying on a one-time emergency request. It would also identify eligible new large loads in advance and set rules for when their demand could be reduced.

More power supply is part of the plan

PJM formally filed its one-time Reliability Backstop Procurement proposal with FERC on July 31. The proposed bid window runs Sept. 30 through Oct. 21, with results expected by Dec. 2.

The $555/MW-day figure is not an individual bid cap. PJM says it would cap the volume-weighted average levelized cost of all selected RBP offers, allowing individual offers above that level.

Beginning with 2029-30, PJM proposes excluding unsupported incremental new Large Loads from capacity-auction demand until sufficient new supply is offered. IRAS remains pending before FERC as of Aug. 20.

TL;DR:

• PJM has proposed an emergency framework that could require some new large data centers and other major power users to reduce electricity use before broader emergency measures affect other customers.
• The proposal applies to new Large Load megawatts at sites with at least 50 MW of cumulative peak demand that are not in service by June 1, 2027, if they lack sufficient qualifying BYONC or RBP capacity.
• PJM’s latest capacity auction cleared 6,831 MW below its reliability requirement while hitting the FERC-approved price cap of $325 per megawatt-day.
• A new Large Load Registry would track major sites, their electricity needs, backup resources, and supporting capacity, so that PJM and state authorities can plan for responses to shortages.
• The IRAS proposal was filed with FERC on Aug. 13 and has not yet received final approval, so the proposed curtailment framework is not yet an established operating rule.

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This article was made with AI assistance and human editing.