PJM Electricity Costs Surge as AI Demand Outpaces Supply

PJM Interconnection runs the largest power grid in the United States, covering 13 states and Washington, D.C. In the summer of 2025, it became the clearest example of what happens when demand grows faster than new supply.

Reuters reported that electricity bills in parts of PJM territory were projected to rise by more than 20% that summer. The main driver: a surge in data centers built to run artificial intelligence.

Here is what's straining PJM, why the fixes are slow, and what it means for businesses and solar owners in the region.

Why Are Electricity Bills Rising in PJM?

Electricity bills in parts of PJM were projected to rise by more than 20% in summer 2025 because demand from AI data centers is growing faster than the grid is adding new power supply, according to Reuters. Capacity costs, the price PJM pays to guarantee enough supply for peak demand, have climbed sharply.

PJM's capacity auction is meant to keep supply stable by paying resources to be available. When supply is tight, auction prices spike, and those costs flow through to customer bills.

The cost pressure has continued. According to Canary Media, PJM's auction for the 2027–2028 delivery year cleared at a record $16.4 billion and fell short of the grid operator's 20% reserve margin target.

How Do PJM Capacity Costs Reach Your Electric Bill?

Utilities in PJM buy capacity through the grid operator's auction and pass that cost on to customers, so a higher auction price shows up on bills months later. The auction is held years ahead of the delivery period, which means today's prices lock in costs for future summers.

Capacity is different from the energy you use each month. It's a payment to power plants and other resources to be available when demand peaks, whether or not they end up running.

When the auction clears at a high price, every customer in the affected zones helps cover it. Commercial and industrial customers with large loads often feel it most, because capacity charges scale with how much power they draw during peak hours.

How Much Is AI Driving PJM's Demand?

PJM expects demand on its system to grow by 32 GW by 2030, with all but 2 GW of that coming from data centers, according to Reuters. That is an enormous amount of new load for any grid to absorb in a few years.

Data centers need power around the clock, and they are concentrating in a handful of areas within PJM. That puts pressure on both generation and local transmission.

We've tracked how this demand is reshaping grid rules in PJM's data center fix and what it means for solar owners.

Why Isn't PJM Adding Supply Fast Enough?

PJM has lost more than 5.6 GW of net capacity over the last decade, and about 46 GW of new projects are not getting built because of local opposition, supply chain delays, or financing problems, according to Reuters.

The main bottlenecks:

• ●Retirements. Older plants are closing faster than replacements come online.
• ●Stalled projects. Tens of gigawatts of approved projects are stuck before construction.
• ●Interconnection backlogs. Projects wait years for grid connection studies and upgrades.
• ●Local opposition. Many communities resist new plants, transmission lines, or large solar farms.

PJM has since approved a fast-track review for shovel-ready projects, but the backlog won't clear quickly.

How Is the Strain Showing Up Politically?

The pressure has spilled well beyond grid operations. Reuters reported that Pennsylvania Governor Josh Shapiro threatened to pull the state out of PJM over rising costs.

PJM also saw leadership turnover. Its CEO announced his departure, and two board members, including the board chair, were voted out.

Lawsuits, delayed auctions, and price caps have followed. All of it signals a grid under stress before demand has even peaked.

This isn't just a PJM problem. It's a preview of what rising demand, aging infrastructure, and slow approvals look like everywhere.

What Are the Fastest Fixes for a Strained Grid?

The fastest ways to relieve a strained grid are faster permitting, transmission upgrades, and more distributed generation and storage, because these can come online far sooner than new large power plants.

Coal faces strong local opposition, and new nuclear takes many years to build. Near-term relief has to come from options that can move quickly:

• ●Faster permitting. Clearer, quicker approvals for projects that are ready to build.
• ●Transmission upgrades. Moving power from where it's generated to where it's needed.
• ●Distributed storage. Batteries that shift power into peak hours.
• ●Existing solar at full output. Systems already connected to the grid, producing what they were built to produce.

That last one needs no new land, no new interconnection queue, and no new permits.

What Does This Mean for Commercial Solar Owners in PJM?

For commercial solar owners in PJM states like New Jersey, Pennsylvania, Maryland, and Virginia, higher grid prices raise the value of every kilowatt-hour a system produces. New Jersey families have already seen power bills spike as PJM capacity costs soared.

But the upside only shows up if the system is working. Many systems built in the 2010s are now dealing with failed inverters, degraded modules, or lost monitoring access.

Questions worth asking:

• ●Is the system producing what it should? Compare actual output to expected output.
• ●Is the inverter near end of life? It's the most common cause of sudden production loss.
• ●Who is managing it? Unclear ownership often means nobody is watching performance.

Start With a Ballpark Estimate

Grid prices in PJM are unlikely to ease soon, which makes working solar more valuable than ever. Find out what your existing solar project may be worth and whether repowering or selling makes more sense.

Sources: Reuters, "America's largest power grid is struggling to meet demand from AI"; Canary Media, "PJM's capacity costs hit record as grid falls short on supply"