Glen Thomas is president of the PJM Power Providers Group.
Over the past year, a drumbeat of anxiety has sounded across the 13 states and District of Columbia that make up the PJM grid footprint. Consumers, PJM, regulators and policymakers alike were all properly asking a similar question: With the rise of energy demand attributed to data centers, will there be enough power generation to keep the lights on for everyone?
It was a valid concern, but fortunately we are now in a position of knowing that there is more than enough supply ready to enter the market. The issue facing PJM is not a shortage of energy generation ideas or willing developers. In fact, the supply pipeline is bursting at the seams. The power is ready to be built — now, the market and the grid must step up to let it be built.
To understand why the "generation shortage" narrative is yesterday’s concern, look no further than the sheer volume of projects waiting in the wings. Over 55 GW of new generation have already successfully navigated and completed PJM’s rigorous interconnection queue process and are available to come online. These are projects that have completed their studies, cleared engineering hurdles, paid significant readiness deposits and are legally and technically approved to plug into the grid.
If anyone doubts whether that momentum is continuing, consider what happened just last month. PJM’s latest interconnection cycle saw a massive, unprecedented wave of new project applications enter the system — over 800 projects totaling over 220 GW of power generation. To put that in perspective, PJM is projecting a peak demand this summer of 156 GW. While not all these projects will be built, the volume of interest shows power providers are showing up in droves, eager to build to meet our region's growing digital appetite.
Furthermore, in April, PJM issued a Request for Information specifically targeting generation developers willing to contract directly with large load consumers, such as data centers. The response from the development community was overwhelming — over 130 GW of power expressed an immediate interest in contracting with large loads to build new generation. Power providers are raising their hands to say, “We have the sites, we have the technology, and we are ready to build.”
So, what needs to happen next? We have reached an important pivot point. To transform this mountain of potential power into actual, running generation, two distinct actions must happen.
First, the large load data centers driving this demand must sign long-term power purchase agreements with these developers. It can be difficult to build energy infrastructure on speculation or good intentions; it requires billions of dollars in capital and decades-long recovery periods. Financial institutions will be challenged to bankroll a new generation facility without a concrete, long-term contract ensuring that a buyer is waiting on the other end — especially with policymakers placing a cap on capacity prices into 2030. Data center operators want reliable, 24/7 electricity, but the PJM governors and the president have made it clear that they must be willing to underwrite the generation required to serve them. The "Bring Your Own New Generation" concept must transition from a policy talking point into signed corporate contracts.
Second, we must build the highway system to move this energy. A power plant is useless if its electricity is trapped in a localized bottleneck. The PJM transmission system needs aggressive, fast-tracked expansion so that power generated in one corner of the footprint can be reliably delivered to the high-demand hubs throughout the entire region.
This requires state regulators, local policymakers, the Federal Energy Regulatory Commission and PJM to cut red tape and prioritize transmission upgrades. Building transmission is not always easy — local opposition can be significant — especially if the costs are significant and the benefits are not apparent. Transmission providers and state regulators need to be clear in their messaging and transparent with information. The voices of the people impacted by these projects must be heard. With that in mind, there should be a focus on repurposing and/or fully utilizing existing sites to add additional power generation where transmission interconnections exist or can be cheaply and quickly expanded.
Moreover, difficult questions related to cost allocation need to be answered quickly and not endlessly litigated. If state and federal regulators expect that new large load to finance the transmission expansion, then tariffs need to be consistent with that expectation. Much of this work is already underway — it needs to conclude.
The question of last year about available generation opportunities in PJM has been loudly and positively answered. The region now must turn its eyes to getting deals done to finance the generation and the transmission system prepared for significant amounts of new generation to deliver it. There will be significant costs associated with both that will need to be addressed, but it is a logical next step to place costs on those who are creating the need.
