FAQ: Strengthening the Grid for Today & Tomorrow
- All
- Balancing Rising Demand And Reliability
- PJM In Action: A Reliable Grid Sole Focus
- State Policies Impacting New Entry
- The Value of an Independent Grid Operator
Electricity demand is rising rapidly from a combination of factors: primarily the proliferation of data centers and artificial intelligence (AI), some contribution coming from the electrification of vehicles and heating systems, along with broader economic growth.
Data centers are at the heart of the country’s expanding digital economy, including the rapid development of artificial intelligence. These facilities use large amounts of electricity and are by far the largest driver of load growth in the PJM footprint. We are working directly with our member utilities and other entities that deliver electricity to homes, businesses and institutions to understand how much of planned data center development will actually materialize and when. This will allow PJM to best forecast their energy needs so that the transmission system is built out efficiently.
PJM cannot build power plants itself or order them to be built. Adding electricity supply requires all states to encourage the addition of new generation while removing obstacles to resources coming online. For its part, PJM has been clear that federal and state leaders need to expedite the construction of high-voltage transmission lines to move power where it’s needed. States also must reform local permitting processes so that approved projects move to fruition.
PJM’s recent capacity auctions have cleared at higher prices, sending a direct financial signal to developers that more electricity supply is needed immediately. That price signal is the most effective tool to incentivize the construction of new power generation.
The PJM Board of Managers has outlined a series of actions to be taken by PJM and its stakeholders in 2026 to address the challenges of integrating new data centers and other large load customers onto the grid while preserving electricity system reliability and affordability for the 67 million people PJM serves.
The Board’s course of action addresses the need for new power generation that can come online quickly and is coupled with options for new load customers whose electricity demand can be curtailed in times of system need. Both of these goals are intended to address the supply-and-demand imbalance that has the potential to threaten grid reliability and is currently driving up wholesale costs that can impact consumer bills. The Board proposes:
- Significant load forecasting improvements and increased role for states
- Avenues for new large loads to bring their own new generation or enter into a connect and manage framework subject to earlier curtailment
- Creation of an accelerated interconnection track for state-sponsored generation projects
- Immediate initiation of a backstop generation procurement process to address short-term reliability needs
- A review of PJM markets to assess how they can best work in combination to support investment
While PJM has authorized thousands of megawatts of new generation to connect to the grid, many projects face hurdles outside of PJM’s control, including local siting and permitting challenges, supply chain constraints, and financing issues. PJM encourages state and federal policymakers to streamline these external processes to get projects built as quickly as possible.
State policies play a major role in determining the resource mix. As states set aggressive clean energy goals or subsidize specific resource types, it changes the economics for existing power plants, which can accelerate the retirement of certain types of generation. PJM works with states to advance these policy goals without compromising system reliability, providing independent technical analysis to show how different resource mixes affect the broader grid.
PJM is independent, and our highest priority is the reliability of the electric grid. Our role is very similar to air traffic control, but for electricity. We do not own electrical equipment, generate power or set rates; our most important responsibility is the reliable delivery of bulk power to the entities who deliver it to consumers.
PJM is fuel-agnostic; we favor no specific generation resource over another. In fact, the PJM grid benefits from its diverse resource mix.
PJM is governed by an independent Board of Managers. Strict conflict-of-interest rules prohibit these board members from having any financial investment in, or ties to, the companies that sell power in PJM’s markets. In addition, PJM does not own any power plants or transmission lines. The organization’s mandate is to match supply with demand reliably at the lowest possible cost, regardless of whether that power comes from nuclear, natural gas, wind, solar or other sources.
The “wholesale” cost of electricity typically makes up about half of what electric utility ratepayers pay on an electric bill. This is the portion PJM manages—the actual cost of generating the electricity and securing capacity for the future. The remainder of an electric utility bill pays for transmission and distribution (local utility poles, wires and infrastructure), state policies (state-mandated fees, taxes and clean energy riders), and the regulated return for local utility earnings.
There is no backlog in PJM’s interconnection process. In 2023, PJM shifted from a “first-come, first-served” approach to a “first-ready, first-served” system to prioritize viable projects. PJM has processed over 200 GW of generation projects as part of these reform efforts. That said, much new generation has been slow to come online. The pace of development is largely driven by permitting timelines, financing, and supply chain availability. PJM’s role is to clear the path and ensure the grid is ready when projects are ready to move forward.
PJM is addressing this transition by fast-tracking new power sources and reforming how projects connect to the grid. We recently launched a Reliability Resource Initiative, which is fast-tracking 11 GW of high-impact, ready-to-build projects to meet immediate needs. Additionally, our capacity market sends price signals that attract the lowest-cost mix of reliable generation.
PJM is reimagining how resources connect to the grid by integrating AI and smart tools. These technologies help automate technical studies, streamline review processes and reduce delays. This ensures that our engineers can focus on complex reliability analyses rather than administrative tasks, helping clear the way for new resources to come online faster.
