GoKawiilPity the PJM Interconnection. For decades, the grid operator worked quietly and in the background, matching electricity demand with supply. Meanwhile, customers enjoyed some of the lowest electricity prices in the United States.
No longer. Politicians, businesses, households, power companies think it needs an overhaul. Even PJM is in agreement.
PJM released a white paper this week that said the region “has years, not decades” to make fundamental changes to the way it operates. “The current situation is not tenable,” PJM CEO David Mills wrote in a forward to the report.
Normally, this sort of wonky report would land on the desks of a few legislators and regulators. But PJM’s territory includes a large number of data centers, including the compute-dense region of Northern Virginia. What happens to PJM will send ripples throughout the tech world.
The 70-page report is an exercise in navel gazing. But despite the deep introspection, not everyone is convinced the organization is up to the task of overhauling itself. One utility, American Electric Power, is considering pulling out of PJM altogether.
“The current state of PJM’s performance and stakeholder approval process does not give me great confidence that these issues will be resolved anytime soon,” Bill Fehrman, AEP’s CEO, said in an earnings call Tuesday. “In fact, if something is not done now, I expect we could still be having these same conversations in 10 years. The PJM market worked very well when supply exceeded demand, we are now in a very different time.”
Here’s what changed
Cloud computing and AI have begun to strain PJM’s existing generating capacity. Against the backdrop of surging demand, PJM paused applications in 2022 for new generating sources to connect to its grid, citing a years-long backlog. Just as the need for electricity was beginning to grow for the first time in decades, the grid operator prevented new sources from even applying to get hooked up.
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