Data centers may experience temporary power outages to prevent blackouts in the largest US grid

The largest electric grid in the United States is struggling to handle the onslaught of data centers. Now, after an auction to add more generating capacity failed, the grid operator, PJM Interconnection, said it would cut data centers and other large users during the power shortage.

The decision comes as the rapid pace of data center construction has grid operators scrambling to generate power. By 2035, data centers are expected to use 4 times the electricity they do today.

PJM will not begin reducing supply until June 2027, and the cuts will only apply to data centers with capacity of 50 megawatts or larger. The grid operator is holding another auction for new generation capacity.

Similar to other demand response programs, which have been around for decades and typically involve large users such as manufacturers, customers who lost power will be compensated. Such programs typically give customers advance notice, ranging from 30 minutes to a few days, depending on expected demand.

The move is likely to incentivize many new data centers — and perhaps existing ones — to set up their own on-site power sources. Those that do not are likely to rely on standby generators, which tend to be more expensive to operate and often more polluting.

Many data centers prefer diesel generators because the fuel is widely available and can be stored on-site. Federal regulations allow these generators to be used for up to 50 hours per year for demand response events, and up to 100 hours per year if events such as emergencies and maintenance are included.

Vantage Data Centers this week came under fire for apparently coordinating with Virginia environmental regulators to cast doubt on a report that said backup diesel generators could contribute tens of millions of dollars in annual health damage to people living near a 96-megawatt data center in northern Virginia.

PJM has come under criticism in recent months for the way it manages new generating capacity and a large number of new users, including data centers. The network operator’s territory extends from Virginia to Illinois, covering 67 million customers. Over the past year, wholesale electricity prices have nearly doubled, and PJM’s independent market monitor blames data centers for most of that increase.