Data Centers Could Face Rolling Power Cuts as America’s Largest Grid Buckles Under AI Demand

The company that runs the largest electricity grid in the United States has a message for the data center industry: bring your own power, or risk getting cut off.

PJM Interconnection, which delivers electricity across 13 states and Washington, D.C. — serving roughly 67 million customers from Virginia to Illinois — recently informed stakeholders that it intends to start curtailing power to large data centers if supply runs short. The plan is designed as a last resort to avoid widespread blackouts as artificial intelligence infrastructure strains the grid faster than new power plants can be built.

This isn’t a hypothetical problem. It’s the direct result of a construction boom that has data centers popping up across PJM’s territory faster than utilities can add generating capacity to match.

What’s Actually Changing

Here’s the breakdown of the plan, based on PJM’s recent communications to grid stakeholders:

• Timeline: Curtailment won’t begin until at least mid-2027, giving data center operators roughly a year to prepare.
• Who’s affected: Only large facilities — those drawing 50 megawatts or more — will be subject to cuts. Smaller operations are exempt for now.
• Compensation: Like traditional demand-response programs that utilities have used for decades with large industrial customers, affected data centers will be paid for their participation.
• New capacity auction: PJM is simultaneously running another auction aimed at bringing more electricity generation online, hoping to close the supply gap before curtailment ever needs to happen.

In short, this is a safety valve, not an immediate shutdown order. But it signals a significant shift in how the grid operator plans to manage a customer base it can no longer take for granted.

Why the Grid Is Under So Much Pressure

The scale of AI-driven electricity demand is difficult to overstate. Data centers are projected to consume roughly four times as much electricity by 2035 as they do today. That kind of growth curve is almost unheard of for any single category of electricity user, and it’s colliding head-on with a slow-moving permitting and construction process for new power plants.

PJM has faced mounting criticism over how it has handled this surge. Wholesale electricity prices across its territory have nearly doubled over the past year, and the grid’s own independent market monitor has pointed to data center demand as a major driver of that spike — a cost that ultimately gets passed on to everyday residential customers.

The pressure isn’t just theoretical, either. In late July, a large amount of data center capacity abruptly disconnected from the PJM grid after a transmission line failure in Northern Virginia—home to the highest concentration of data centers on Earth. The sudden swing in supply and demand caused a voltage disturbance felt as far away as Chicago, flickering lights across the region even though it stopped short of a full blackout. It’s the kind of event experts say will keep happening as more massive, always-on power users cluster in the same regions.

It’s Not Just PJM

PJM may be the biggest grid wrestling with this issue, but it’s far from the only one. Texas moved first, directing regulators to draft rules that would require utilities to curtail their largest customers during periods of tight supply — a response shaped by the deadly 2021 winter grid failure. The Southwest Power Pool, which serves millions of people across Kansas, Oklahoma, and the surrounding Great Plains, has said it also needs to expand its own power-reduction programs.

The common thread: grid operators across the country are concluding that unlimited, uninterrupted power for data centers is no longer something they can guarantee without risking reliability for everyone else.

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What It Means for the Data Center and AI Industry

For hyperscalers and AI infrastructure companies, this shift adds a new variable to site selection and capacity planning. A few implications worth watching:

1. On-site power becomes more valuable. Facilities with their own generation—natural gas, battery storage, or on-site renewables — will be far less exposed to curtailment risk.
2. Location matters more than ever. Regions with tighter power margins, like Northern Virginia, may become less attractive relative to areas with newer or less-stressed grid infrastructure.
3. Compensation could offset some risk. Because curtailed data centers will be paid, well-capitalized operators may treat this as a manageable cost of doing business rather than a dealbreaker.
4. Expect more regulation, not less. As other grid operators watch how PJM’s plan plays out, similar curtailment frameworks are likely to spread to other regions grappling with AI-driven demand.

The Bottom Line

America’s power grid was built around the assumption that demand is spread out across millions of homes and businesses, each drawing modest and varying amounts of electricity. Data centers break that assumption entirely — a single large facility can use as much power as tens of thousands of homes, and it uses that power constantly.

PJM’s curtailment plan is an attempt to buy time while more generation gets built. Whether it’s enough will depend on how fast that new capacity actually comes online — and how quickly the rest of the country’s grid operators follow PJM’s lead.

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Have thoughts on how AI’s power demands are reshaping the energy sector? This is a fast-moving story—check back for updates as PJM’s auction results and 2027 curtailment rules take shape.