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PJM Electricity Bills May Increase by $30 due to Data Centers, Unreliable Gas Plants, and Delays in Building New Clean Energy

Strategic Insights

— 2 min read

PJM's electricity bills may increase by $30 for households in the 13 states and Washington D.C. that are part of the electric grid operator, due to the surge in data centers, unreliable gas plants, and delays in building new clean energy. This price hike is a direct result of fossil fuel unreliability and PJM's clogged interconnection queues. Capacity auctions, which determine the price of electricity during peak hours, have resulted in a record $16.1 billion price increase, with prices rising by 9 percent from the previous year. Renewable energy, however, has saved the day, keeping PJM from falling into an unacceptable risk of blackouts.

Key Takeaways:

  • The price increase is attributed to four main culprits: fossil fuel unreliability, PJM's interconnection queue backlog, data center-driven load growth, and double charging by some fossil power plants.
  • PJM has taken steps to fix the double-charging problem and streamlined processes to get new power plants online, but the other issues still persist.
  • Renewable energy participated in the auction, with over 18,000 megawatts participating, up 75 percent from last year, and this increase is due to new clean energy getting built and changes to PJM rules to require all renewables to participate.
  • PJM has almost 286 gigawatts of new clean resources waiting to come online in its interconnection queue, and another roughly 40 megawatts that are held up for other reasons.
  • Even a fraction of these queued resources could significantly improve reliability and save consumers up to $7 billion, but PJM's slow processing means that resources have to wait for five or more years to connect to the grid.
  • PJM is blaming states for their clean energy policies, promoting the retirement of polluting fossil resources, and allowing gas plants to cut in line.
  • Solutions include gas-fired power plants performing when needed, complying with FERC Order 2023 to speed up queue processing and get new clean energy connected to the grid, and promoting transparency about delays.
  • States and PJM need to explore ways to better support battery storage, including examining and overcoming barriers to storage interconnection.
  • PJM should pursue long-term structural changes to the capacity market to maintain reliability through the energy transition, incorporating all state policies as planning inputs, and comply with FERC Order 1920.

Statistics:

  • Capacity prices in PJM Interconnection increased to a record $16.1 billion, up 9 percent from the previous record of $14.7 billion.
  • Prices went up for two reasons: ever-increasing demand from data centers and lower reliability from gas-fired power plants.
  • Renewable energy saved the day, keeping PJM from falling into an unacceptable risk of blackouts.
  • Over 18,000 megawatts of renewables participated in the auction, up 75 percent from last year.
  • There are almost 286 gigawatts of new clean resources waiting to come online in PJM's interconnection queue.
  • Even a fraction of these queued resources could significantly improve reliability and save consumers up to $7 billion.
  • The average auction price in previous years was $85/MW-day.

Sources:

  • Natural Resources Defense Council (NRDC)
  • The Reliability Resource Initiative (RRI)
  • PJM Interconnection, Reliability Resource Initiative Results Summary, May 6, 2025, slide 10
  • FERC Order 1920
  • FERC Order 2023
  • Federal Energy Regulatory Commission

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