PJM to cut power to massive data centers by 2027 as grid strains under AI boom

The largest U.S. electrical grid just drew a hard line with Big Tech. PJM Interconnection, which manages power for 67 million people from Virginia to Illinois, will start cutting off data centers that draw 50 megawatts or more during shortages beginning in June 2027. It’s a direct response to a capacity auction that fell flat and a relentless wave of new data center construction. By 2035, those facilities are projected to suck up four times more electricity than they do now — and wholesale prices have already nearly doubled in the past year alone. PJM’s independent market monitor points squarely at data centers for most of that spike.

The mechanism itself isn’t new. It mirrors demand-response programs that manufacturers have used for decades — get compensated for agreeing to be throttled, with anywhere from 30 minutes to a few days’ notice. But the scale and the target are what make this unusual. PJM isn’t waiting around. They’re already running another auction for fresh generating capacity, but the message is clear: if you’re building a hyperscale facility in PJM’s territory, you can’t assume the grid will be there when you need it.

That uncertainty will force a reckoning on backup power. Most data centers lean on diesel generators — they’re widely available and storable on-site, though federal rules limit their use to 50 hours per year for demand response and 100 hours total including emergencies. The economics and optics of that are getting ugly. Fresh controversy erupted this week when Vantage Data Centers appeared to coordinate with Virginia environmental regulators to downplay a report tying diesel backups at a 96-megawatt facility to tens of millions in annual health damages for nearby residents. The industry’s dirty secret is getting harder to hide.

Longer-term, this pushes new and existing projects toward building their own dedicated power — likely a mix of natural gas turbines and renewables paired with massive batteries. The operators who don’t invest in self-generation will be stuck running expensive, polluting generators whenever the grid says no. For a sector that markets itself as the engine of the future, getting booted from the grid feels like a throwback to an era before reliable utility power was a given. The real test comes in 2027, when the first mandatory blackouts hit and companies have to explain to customers why their cloud services just went dark.