A bipartisan group of governors and federal officials are calling for the PJM Interconnection, the largest electricity market in the US, to conduct a power auction aimed at stimulating the construction of new power plants.
They are advocating for an ’emergency’ auction where companies can secure electricity through 15-year contracts. These extended contracts are designed to facilitate infrastructure development by ensuring revenue and deterring speculative grid connection requests from data center developers.
This initiative is driven by the increasing electricity demand from AI technologies, while lawmakers and tech firms establishing data centers are facing public backlash due to escalating electricity costs.
PJM oversees the largest US electricity grid, covering 13 states from the Midwest to the Atlantic, notably hosting a cluster of data centers in Virginia. The joint statement issued by governors, including Democrats Josh Shapiro (D-PA) and Wes Moore (D-MD), alongside Secretary of Interior Doug Burgum and Secretary of Energy Chris Wright, stresses the need for this auction. Notably, the White House and governors lack the authority to mandate this auction, and PJM was reportedly not involved in the announcement.
The Department of Energy (DOE) proposes that data centers should bear a higher cost for new power generation compared to residential customers. It suggests allocating infrastructure expenses to data centers unless they construct their power plants or agree to reduce energy consumption during supply shortages. The auction could potentially result in $15 billion worth of new power generation, as estimated by the DOE.
Source: The Verge