PJM warns AI and data centers are straining the U.S. power grid and calls for market changes

PJM Interconnection, the largest U.S. grid operator, said surging electricity demand from AI and cloud-computing data centers is forcing the organization to rethink how it runs its system in order to maintain reliability.

In a white paper released May 8, 2026, PJM said its region — which includes Northern Virginia, a major data center hub — has “years, not decades” to make fundamental changes. PJM CEO David Mills wrote in the report’s foreword that the current situation is “not tenable.”

The 70-page report, titled “Powering Reliability Through Market Design,” lays out proposed adjustments to PJM’s market design as demand rises. PJM said the strain has been building as power consumption grows, and noted that it paused applications for new generating sources in 2022 because of a substantial backlog.

Some stakeholders are skeptical that PJM can reform itself quickly enough. On an earnings call, American Electric Power (AEP) CEO Bill Fehrman said the company is considering withdrawing from PJM, citing a lack of confidence in the grid operator’s performance and its stakeholder approval processes.

Fehrman said PJM’s market historically worked well when there was excess supply, but is now operating under very different conditions as demand increases rapidly.