{"slug": "pjm-says-ai-data-centers-must-bring-capacity-to-earn-firm-service", "title": "PJM Says AI Data Centers Must Bring Capacity to Earn Firm Service", "summary": "PJM Interconnection proposed a framework on July 27 requiring AI data centers and other large electricity users to secure generating capacity or face curtailments during shortages, with the plan slated for filing with the Federal Energy Regulatory Commission. PJM projects 70 GW of new large-load demand by 2038, while 15 GW of generation has retired since 2022, and two consecutive capacity auctions cleared below reliability requirements. The proposal introduces Interim Resource Adequacy Service (IRAS) starting June 1, 2027, and a Large Load Registry to track major users.", "body_md": "# PJM Says AI Data Centers Must Bring Capacity to Earn Firm Service\n\nPJM’s proposed reliability framework would require many future large loads to secure enough generating capacity or face curtailments during power shortages.\n\nPJM is proposing a new framework for connecting AI data centers and other large electricity users that would require many future campuses to either secure enough generating capacity to support their demand or accept curtailments during periods of resource shortages.\n\nThe proposal, approved July 27 by the PJM Board of Managers and slated for filing with the Federal Energy Regulatory Commission, reflects mounting concern over whether the nation’s largest wholesale power market can keep pace with surging demand from AI infrastructure.\n\nPJM projects roughly 70 GW of new large-load demand by 2038 while noting that about 15 GW of generation has retired since 2022. Two consecutive capacity auctions have also cleared below the system’s reliability requirement.\n\nIf approved by FERC, the [proposal](https://insidelines.pjm.com/pjm-board-directs-action-on-resource-adequacy-affordability-and-large-loads/) would mark one of the first formal attempts by a major US grid operator to tie new AI-scale load growth to demonstrated resource adequacy rather than assuming the regional market will supply it.\n\n## A New Service Model\n\nFor AI data center developers, the proposal changes the power planning equation. New campuses may need to secure enough generating capacity through new supply or market arrangements to receive the same level of firm electric service as existing customers. Those that do not could face curtailments when PJM lacks sufficient resources.\n\nNeil Osnato, founder of Persistence Analytics Group, said the proposal marks a fundamental change in how new large loads are treated. Rather than simply making AI data centers interruptible, he said, PJM is separating physical interconnection from the traditional expectation of firm resource adequacy service.\n\n“PJM is beginning to separate ‘connected’ from ‘firm,’ and asking new large loads to earn the reliability product they previously could largely assume,” Osnato told Data Center Knowledge.\n\nPJM is also encouraging developers to secure power outside the traditional capacity auction. Alongside a one-time Reliability Backstop Procurement, the grid operator has launched a facilitated bilateral matchmaking process intended to connect new electricity demand with prospective suppliers. PJM said bilateral contracting was strongly supported by stakeholders and is expected to help bring new large loads onto the system.\n\n## How IRAS Works\n\nAt the center of the proposal is Interim Resource Adequacy Service (IRAS), previously known as Connect and Manage. Beginning June 1, 2027, new large loads that do not bring sufficient capacity to meet their resource adequacy needs – or otherwise secure adequate supply – would receive service under the new framework rather than the traditional level of firm service. During capacity shortages, those customers would be curtailed before PJM deploys broader Pre-Emergency Load Management measures.\n\nThe proposal would apply to new large loads that cannot otherwise be served while maintaining PJM’s reliability standard. The Board said customers seeking the same level of firm service as existing loads would need to bring sufficient new capacity to the system or participate in IRAS until adequate supply is available.\n\nPJM also plans to establish a Large Load Registry to improve forecasting and track major electricity users. PJM said the registry is intended to help states exercise their own authority over retail rate design and cost allocation because the grid operator cannot create separate retail rate classes itself.\n\n## Building Supply\n\nThe reliability proposal accompanies a broader package intended to address tightening supply across the PJM region. The Board directed PJM to conduct a one-time [Reliability Backstop Procurement](https://www.pjm.com/-/media/DotCom/committees-groups/cifp-rbp/2026/20260630/20260630-item-02a---pjm-reliability-backstop-procurement-proposal---paper.pdf) beginning in September to acquire additional capacity after the 2028–2029 Base Residual Auction produced a 6,831 MW shortfall. Procurement targets would be reduced by signed contracts for new supply, approved new generation and large-load sites committed to demand-side participation, helping avoid procuring capacity already secured through other arrangements.\n\nPJM said new demand response resources and distributed energy resources would also qualify for the procurement if developers can demonstrate participating sites and long-term commitments. The grid operator emphasized that selected projects would still move through PJM’s standard interconnection process, with no special queue for Reliability Backstop Procurement participants.\n\n## Who Pays?\n\nThe Board framed the proposal as a way to prevent the cost of serving rapidly growing AI and other large loads from shifting to existing customers.\n\n“Existing consumers should not bear higher capacity costs caused by new Large Loads that do not bring, or otherwise contract for, the new supply necessary to serve them,” the Board wrote. It added that while PJM lacks jurisdiction to allocate retail costs directly to individual data centers, state action will be essential.\n\nOsnato said the proposal could reshape how hyperscale campuses are financed as well as built because power is becoming part of the project’s capital strategy rather than simply a utility service. Developers may increasingly pursue dedicated generation, bilateral capacity arrangements, storage, virtual power plants and flexible-load contracts, but they will also need to demonstrate those resources can reliably perform when the grid is under stress.\n\n“Do not grant firm-service economics against an unverified capacity or load claim,” Osnato said. “Prove the megawatts, prove the flexibility, then grant the firmness.”\n\nRob Gramlich, president of Grid Strategies, said PJM may not be alone in rethinking how rapidly growing AI loads are integrated into the grid.\n\n“Texas (ERCOT), MISO, and SPP are considering similar policies,” he told Data Center Knowledge.", "url": "https://wpnews.pro/news/pjm-says-ai-data-centers-must-bring-capacity-to-earn-firm-service", "canonical_source": "https://www.datacenterknowledge.com/energy-power-supply/pjm-says-ai-data-centers-must-bring-capacity-to-earn-firm-service", "published_at": "2026-07-31 13:58:20+00:00", "updated_at": "2026-07-31 14:03:46.910339+00:00", "lang": "en", "topics": ["ai-policy", "ai-infrastructure"], "entities": ["PJM Interconnection", "Federal Energy Regulatory Commission", "PJM Board of Managers", "Persistence Analytics Group", "Neil Osnato", "Data Center Knowledge", "Interim Resource Adequacy Service", "Large Load Registry"], "alternates": {"html": "https://wpnews.pro/news/pjm-says-ai-data-centers-must-bring-capacity-to-earn-firm-service", "markdown": "https://wpnews.pro/news/pjm-says-ai-data-centers-must-bring-capacity-to-earn-firm-service.md", "text": "https://wpnews.pro/news/pjm-says-ai-data-centers-must-bring-capacity-to-earn-firm-service.txt", "jsonld": "https://wpnews.pro/news/pjm-says-ai-data-centers-must-bring-capacity-to-earn-firm-service.jsonld"}}