Washington D.C. – July 28, 2025 – 

The price for electricity on the largest U.S. power grid has hit a new record high, with the increase largely attributed to the unprecedented and rapid expansion of Artificial Intelligence (AI) data centers, which require substantial amounts of energy to operate.

PJM Interconnection LLC, the operator of the electricity grid spanning 13 states from the Midwest to the mid-Atlantic and Washington D.C., announced that the daily capacity price for the upcoming 2026/2027 delivery year was set at $329.17 per megawatt-day. This figure represents a significant increase from last year’s record of $269.92 per megawatt-day and reflects the surging demand for power across the region.

The annual capacity auction, which ensures sufficient power generation to meet future electricity needs and prevent blackouts, concluded last week. The total cost to businesses and households in the PJM region to secure this future electricity supply is estimated at $16.1 billion for the 12-month period beginning June 2026, up from $14.7 billion in the previous auction.

The AI Factor:

Experts and market monitors for PJM Interconnection have pointed directly to the “massive buildout in AI data centers” as the primary driver behind this escalating demand. Training a single large AI model, such as a chatbot, can consume as much electricity as 100 homes over a year. The proliferation of these energy-intensive facilities, particularly in “Data Center Alley” in Virginia and other areas within the PJM footprint, has created an unprecedented surge in electricity consumption.

A June report by Monitoring Analytics, PJM’s external market monitor, found that between 2024 and 2025 alone, data center power usage accounted for an staggering $9 billion, or 174%, of increased power costs. PJM’s forecasted peak load for the 2026/2027 Delivery Year increased by more than 5,400 MW year-over-year, largely due to data center expansion, alongside electrification and economic growth.

Impact on Consumers and Grid Stability:

While wholesale capacity costs represent only a portion of retail electricity bills, PJM estimates that the new capacity price could translate to a 1.5% to 5% year-over-year increase in some customers’ bills, depending on how utilities pass on these wholesale costs. This follows significant increases already seen by consumers in some areas, such as a reported $25 monthly increase in New Jersey bills starting in June.

Beyond price hikes, the heightened energy demand from AI data centers also raises concerns about grid reliability and stability. Data centers require consistent, high-power loads, and their rapid construction is outpacing the development of new generation capacity. While efforts are underway to build more power plants, including nuclear and gas-fired generators, there is a time lag that impacts prices. Moreover, the density of these facilities can lead to voltage fluctuations and, in extreme cases, the risk of outages if multiple facilities disconnect simultaneously to protect sensitive equipment.

The latest auction also notably reached a FERC-approved price cap of $329.17/MW-day, a measure put in place to protect ratepayers from even steeper increases. While this cap provided some relief, the fact that prices hit this maximum across all zones underscores the severe pressure on the grid.

The soaring electricity costs underscore the significant infrastructure challenges posed by the rapid advancement of AI technology, forcing utilities and policymakers to grapple with how to meet this escalating demand while ensuring affordability and grid resilience.