PJM Interconnection, the operator of the largest electricity grid in the United States, serving approximately 65 million people across 13 states and the District of Columbia, has issued a stark warning: large data centers may face temporary power cuts starting in June 2027 to prevent widespread blackouts during peak demand periods. The decision, which received emergency approval from the U.S. Department of Energy (DOE) in May 2026, marks a milestone in the growing tension between the accelerated expansion of artificial intelligence infrastructure and the limited capacity of the American power grid.
According to a report published by TechCrunch on July 28, 2026, the measure will exclusively affect data centers with a demand of 50 megawatts (MW) or more. PJM estimates that by 2035, data center electricity consumption will be four times higher than current levels. Data cited by Synapse Energy Economics indicates that data centers accounted for about 6% of PJM's total load in 2024, but that share is expected to jump to a staggering 24% by 2040.
PJM's most recent capacity auction revealed a shortfall of 3.49 gigawatts (GW) — insufficient power to meet projected demand. In response, the operator proposed a backstop capacity auction starting in September 2026 to cover part of this deficit, which reaches 6.8 GW when considering the delivery cycle beginning in mid-2028.
The PJM decision did not emerge from a vacuum. Reuters reported in May 2026 that the DOE authorized the operator to restrict supply to data centers and other large loads that have their own backup generation. The logic is straightforward: during grid emergencies, facilities with on-site generators can operate independently, relieving pressure on the electrical system without completely halting their critical operations.
The context is exacerbated by a historic heat wave. In July 2026, electricity demand in the PJM region approached an all-time record of 166,147 MW, forcing the activation of emergency orders between July 1 and 3. Extreme temperatures, combined with the proliferation of data centers dedicated to AI model training and inference, created a perfect storm in the energy sector.
The impact on Big Tech is immense. Companies like Amazon (AWS), Microsoft Azure, and Google Cloud have invested billions of dollars in building new data centers in the PJM region, especially in Northern Virginia — known as "Data Center Alley" — which hosts the highest density of facilities in the world. The prospect of mandatory power cuts forces these companies to rethink their expansion strategies and accelerate investments in local energy generation, including solar farms, wind installations, and even small modular nuclear reactors.
Utility Dive reported that the PJM board has also proposed an Expedited Interconnection Track (EIT) for new generating units, aiming to accelerate the connection of energy sources to the grid. Currently, the backlog of projects awaiting interconnection is one of the system's biggest bottlenecks. GridLab calculated that if just 10% of PJM's queued projects had been connected in time for the 2026/27 capacity auction, clearing prices would have fallen to $254/MW-day, a $3.5 billion reduction in total system cost.
Meanwhile, data centers already in operation or under construction will need to adapt quickly. PJM has established that installations without co-located generation will be prioritized for curtailment over residential and commercial customers during emergencies. This represents a significant reversal in the traditional hierarchy of power supply.
The PJM case serves as a study in how America's critical infrastructure is being challenged by the AI revolution. Other grid operators across the U.S. and around the world are watching closely, as similar problems may emerge in their jurisdictions. Europe, for example, already faces equivalent pressures from data center growth in Ireland, the Netherlands, and Germany.
The decision also reignites the debate over data center regulation. To what extent should these facilities be responsible for their own power generation? How to balance AI-driven economic development with grid stability and residential consumer protection? The Federal Energy Regulatory Commission (FERC) has already given six grid operators 60 days to rewrite their rules for data centers above 20 MW.
Ultimately, PJM's message is clear: the era of data centers as passive electricity consumers is coming to an end. The future demands that these facilities become active participants in demand management, contributing to system stability instead of simply draining it. For the technology sector, this represents both an operational challenge and an opportunity for innovation in energy infrastructure.
Sources: TechCrunch, Ars Technica, TechCrunch (PJM analysis)
