PJM’s $23B Warning: AI Load Is No Longer Just a Power Demand Story
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For years, the story of Bitcoin mining and power grids was relatively simple: miners wanted cheap electricity, grids wanted flexibility, and the debate centered on whether large compute loads helped or hurt the system.
The AI data center boom is making that conversation much more complicated.
A new first-quarter – and 937-page(!!) – report from Monitoring Analytics, the Independent Market Monitor (IMM) for PJM Interconnection, offers one of the clearest warnings yet about what happens when large compute loads arrive faster than the grid can add a reliable power supply.
PJM is the largest US grid operator, serving all or parts of 13 states and Washington, DC. Its territory includes Northern Virginia, the world’s densest data center market, as well as major demand centers across the Mid-Atlantic and Midwest.
In fact, this report reads like the sequel to PJM’s earlier rule-change proposal, as covered in a previous Miner Weekly issue in March, which detailed PJM’s move to overhaul how large electricity users connect to and pay for the grid. Now the market monitor is putting numbers behind the concern: data center load is not just testing interconnection rules, it is already reshaping capacity-market costs.
At a high level, the report’s message is blunt but nuanced: PJM’s energy market still worked competitively in the first three months of 2026, but its capacity market is under strain.
That distinction matters.
The energy market is where electricity is bought and sold for near-term use — essentially the day-to-day market for power. The capacity market is different. It pays for power plants and other resources to be available in the future, especially during peak demand or emergencies. In plain English: energy pays for the electricity used today; capacity pays for the insurance policy that enough electricity will be there tomorrow.
That insurance policy is getting much more expensive.
PJM’s total wholesale power cost rose 75.5% in the first quarter from a year earlier, from $77.78/MWh to $136.53/MWh. Wholesale power cost is the all-in market cost of serving electricity demand through PJM. It includes energy, capacity, transmission, ancillary services and administrative fees, but the first three categories dominate the total.
Energy is the cost of the electricity itself. Capacity is the cost of making sure enough power resources are available in the future. Transmission is the cost of moving electricity across the high-voltage grid. Together, those three categories made up 98.3% of PJM’s wholesale power cost in Q1.
Each contributed to the increase. Energy costs rose 78.5%, from $54.67/MWh to $97.56/MWh. Capacity costs jumped 398.1%, from $3.57/MWh to $17.78/MWh. Transmission costs rose 5.3%, from $17.86/MWh to $18.80/MWh. Energy drove the largest dollar increase, while capacity had by far the steepest percentage increase.
That does not mean households will see their electric bills rise by 75.5%. Retail power bills include many other items, including local distribution charges, state-regulated utility costs, taxes, riders and long-term power contracts. Wholesale costs also flow through at different speeds depending on the state, the utility and the type of customer.
But the direction seems clear – at least according to PJM’s IMM – that the cost stack pressure behind customer bills is getting heavier.
Not just “supply and demand”
The most interesting part of the report is not simply that power costs are rising. It is how the Market Monitor explains why.
The report pushes back on two easy explanations at once.
The first is the argument that high capacity prices are just supply and demand: demand is rising, supply is tight, so prices should go up. The second is the opposite argument: that high prices prove PJM’s capacity market is broken.
The Market Monitor’s view is more specific. PJM’s capacity market was designed to handle normal load growth — the gradual increase in electricity demand from homes, businesses, factories, weather and broader economic activity. What it is facing now is different: large data center loads arriving in concentrated blocks, backed by customers with deep pockets and urgent timelines.
In that context, “supply and demand” is true but incomplete. The demand is real, but it is not organic. It is being driven by a new class of power buyer whose need for electricity may look almost unlimited compared with the grid’s ability to add dependable capacity.
The report says current capacity-market conditions are “almost entirely” the result of large data center load additions, both actual and forecast. It also says data center load growth is “unique and unprecedented and uncertain,” requiring a different approach than simply treating the results as ordinary supply and demand.
That is the nuance: the Market Monitor is not saying competitive markets should be abandoned. It is saying the market is being asked to absorb a kind of demand it was not designed for.
The report even argues that, without the “paradigm shift” represented by what it calls the almost inexhaustible demand for power from data centers, PJM’s capacity market would have produced reliability at prices more consistent with normal load growth and the cost of new capacity.
In other words, the issue is not whether data centers should get power. The issue is how they should get power — and who should pay for the reliability cushion needed to serve them.
The $23 billion question
The scale of that cost shift appears to be no longer theoretical.
The Market Monitor estimated that existing and forecast data center load increased capacity-market revenues by a combined $23.1 billion across the 2025/2026, 2026/2027 and 2027/2028 capacity auctions. It also said the inclusion of data center load in the last two auctions increased customer bills by $13.8 billion, even after a price cap under the Pennsylvania-PJM agreement limited the impact.
A capacity auction is the process PJM uses to make sure enough power resources will be available years ahead. Utilities and power suppliers buy capacity obligations, and generators get paid for being available. When large new loads are added to the forecast, PJM needs more capacity to serve them. If supply is tight, prices rise.
It’s important to note that the $13.8 billion figure is not charged to every household as a simple flat fee. Capacity costs flow through utilities and load-serving entities, and the actual impact varies by state, utility, customer class and capacity zone. But as a rough systemwide equivalent, spreading $13.8 billion across about two years of PJM electricity demand works out to roughly 0.85 cents per kWh.
The Market Monitor’s concern is that forecast data center demand is being included in the regular auction before enough new generation exists to serve it. In that setup, other customers can end up paying higher capacity costs created by the arrival of large data centers.
This does not mean data centers are the only reason power costs rose in the first quarter. The report also points to higher fuel costs, transmission constraints and winter weather. PJM’s real-time electricity price, known as LMP, rose 67.8% from a year earlier. LMP stands for locational marginal price. In plain English, it is the wholesale price of electricity at a specific place and time. It reflects the cost of generating power, congestion on the grid, and losses from moving electricity.
Natural gas remained the biggest driver of real-time prices. Gas costs accounted for 47.0% of PJM’s real-time load-weighted LMP in the first quarter, and gas plants were the marginal resource in most real-time intervals. A marginal resource is the last and often most expensive power plant needed to meet demand. That plant often sets the market price.
So the cleaner read is this: AI data centers did not single-handedly cause PJM power costs to rise. But they are becoming one of the biggest reasons the region’s future reliability looks more expensive and politically difficult.
PJM wants data centers to bring their own power
The report’s proposed answer is direct: large new data centers should bring their own new generation or be fully curtailable.
Curtailable means the customer can be required to reduce or shut off load when the grid is under stress. “Bring your own new generation” means a data center would need to contract for new power supply that matches its demand, instead of relying on the existing grid and pushing the cost of new capacity onto everyone else.
The Market Monitor recommends that PJM establish a load queue for large new data centers so they are not added until there is adequate generation capacity to serve them. It also recommends an expedited queue option for data centers that bring their own new generation with location and timing characteristics reasonably matched to their load profile.
That recommendation has obvious implications for the computing industry.
For years, Bitcoin miners have had to think like power developers. They searched for cheap or stranded power, built near substations, negotiated curtailment, managed price volatility and learned that energization matters more than equipment announcements.
AI data centers are now running into a similar reality, but at a much larger scale and with less tolerance for interruption.
The lesson from PJM is not that data centers are bad for the grid. It is that large new loads cannot be treated as ordinary demand growth when they arrive in gigawatt-scale clusters and expect firm service. Someone has to pay for the generation, transmission and reliability cushion needed to serve them.
The fight is over who that someone should be.
Why this matters beyond PJM
PJM is not the only grid facing this issue. Across the US, utilities and grid operators are trying to reconcile three forces that do not move at the same speed.
- AI data center demand is moving fast.
- Generation and transmission development move slowly.
- Customer affordability is becoming politically sensitive.
That mismatch is why the PJM report matters beyond its own footprint. It gives a data-rich version of the same question now emerging in other power markets: when a hyperscale data center wants to connect quickly, should the broader customer base help pay for the system upgrades and capacity needed to serve it?
The Market Monitor’s answer is no — or at least, not without clearer rules. Its view is that data centers should bear their own costs and risks, rather than shifting them to households, small businesses and other industrial customers.
That framing is likely to spread.
For Bitcoin miners, the report is both a warning and an opportunity.
The warning is that large-load scrutiny is intensifying. Mining, AI, cloud and high-performance computing will all face more questions about whether they are adding costs to the grid or bringing real flexibility and power supply.
The opportunity is that miners already understand the power-first playbook. As more mining companies pivot toward AI and HPC, their experience with power procurement, curtailment and interconnection could become a competitive advantage.
The AI boom may have started as a race for GPUs. PJM’s report suggests the next phase will be a race for credible power.
And in that race, the most important question may not be who can build the biggest data center. It may be who can prove they are not leaving everyone else with the bill.
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