PJM Tells Data Centers: Secure Your Own Power Supply or Face Curtailment Risk

PJM Interconnection, the operator of the nation's largest power grid, is moving to keep surging data-center demand from driving up electricity costs for households and small businesses. In a directive issued by PJM's Board on January 16, 2026, the grid operator outlined reforms that effectively set a two-track path for large new loads: either procure incremental generation to match their demand or accept a heightened risk of having power curtailed during shortages. The backdrop is a sharp rise in capacity-market costs. Capacity auction prices climbed from $28.92 per megawatt-day in the 2024/2025 auction to $329.17 per megawatt-day for the 2026/2027 cycle, a more than tenfold increase in two years. PJM also reported the 2027/2028 Base Residual Auction cleared 5.6% below the target reserve margin. PJM said AI-driven data-center growth is outpacing planning assumptions and is expected to add tens of billions of dollars in system costs across its network through the late 2020s. Without policy changes, those costs would be reflected in customer bills across PJM's footprint, which spans 13 states and the District of Columbia and serves roughly 65 million people. At the center of the reform package is "Bring Your Own New Generation" (BYONG). Under BYONG, any facility adding 50 MW or more of load at a single point of interconnection must either provide its own incremental generation or accept curtailment risk. PJM plans an expedited interconnection pathway for BYONG resources, targeted for August 2026. The initiative is paired with a "Connect and Manage" framework that prioritizes curtailments during grid shortages. Facilities that have not secured their own generation would be curtailed first. PJM said the measures were shaped through extensive stakeholder engagement in late 2025 and have support from the Trump administration as well as governors across PJM's territory.