Late last week, US President Donald Trump, alongside 13 governors, unveiled a plan that could have far-reaching effects on the data center market.

Styled as an action to address increasing prices across the PJM Interconnection Grid, which serves all or parts of 13 states, including data center hubs in Virginia and Ohio, the plan urged the Regional Transmission Operator (RTO) to hold an emergency auction for data center companies to bid on 15-year contracts for new electricity generation capacity. The bipartisan group also pushed the RTO to build more than $15 billion of reliable baseload power generation.

The emergency auction would be unprecedented, but it isn't surprising given the skyrocketing capacity-addition projections across the region. In its latest annual capacity auction, which closed in July, wholesale electric capacity grew 22 percent compared to last year. The Trump administration, alongside the governors, argued that the issues are compounded by the fact that large amounts of firm capacity are slated for retirement by 2030, which it argues would put increased pressure on the grid to meet the growing demand.

Therefore, to accommodate this growth, utilities across the PJM grid have announced massive increases in generation. However, due to the oft-arduous approval process and construction lag times, there has been a growing call for a more streamlined service for the data center market. The plan subsequently aims to expedite the construction of new power plants, especially natural gas-powered ones, to supply power directly to the data center sector. At the start of last year, the Institute for Energy Economics and Financial Analysis (IEEFA) found that utilities across Virginia, North Carolina, South Carolina, and Georgia plan to build more than 20GW of natural gas power plants by 2040 to meet energy demand from the data center sector.

"Under President Trump's leadership, the administration is leading an unprecedented bipartisan effort urging PJM to fix the energy subtraction failures of the past, prevent price increases, and reduce the risk of blackouts," White House spokeswoman Taylor Rogers said.

However, concerns remain over the gas turbine supply chain, with its heavily constrained nature and a stuffed order book likely a bottleneck in the drive to bring more generation online. This has led to more novel natural gas solutions emerging from the woodwork, such as Boom Supersonic and ProEnergy’s plans to repurpose airline jet engines to power data centers behind the meter.

In addition, with the repeal of many tax credits for new renewable projects, there will be increased pressure on the natural gas supply chain to meet demand.

While the plan may lead to some more generation coming online faster than expected, it is still beholden to global supply chains and may not have an immediate impact. As a result, Advanced Energy United, which represents energy companies and corporate buyers across clean-energy sectors, said the approach doesn't address core challenges such as making PJM's grid-connection process more efficient.

The clearer aim of the initiative, it seems, especially in the short term, is to assuage growing political angst over who is responsible for the costs of the new generation needed for the growth of AI.

We have already seen large bill increases in data center hubs such as Columbus, Ohio. In the city, the average residential bill is set to increase by $27 a month. Overall, residential bills across the 13 states within the network are expected to grow significantly next year, with data centers the main culprit.

In response to cost increases, legislators across several of the 13 states have seen new ratepayer rules approved by their political and regulatory bodies, which have set guidelines for who is responsible for the costs of constructing new generation and transmission infrastructure. Ohio was one of the first to enforce new rules, with new data center customers on the hook for a minimum of 85 percent of the energy they say they need each month, even if they use less. A few months after the approval, AEP Ohio, the state's largest utility, announced that it had seen its pipeline of large load capacity additions shrink as a result. The state utility said in a statement that it was the direct result of the new rules, which had culled many speculative and zombie projects.

The new auction resembles some of the aspects of the new ratepayer class approved in places like Ohio, and proposed in Virginia and Pennsylvania. Subsequently, it could be the first step towards a universal requirement that data center developers play an integral role in financing the new capacity additions needed to power the planned facilities. President Trump has not been afraid to dictate the pace of investment within the tech market, and with so many within the sector avowed allies of the President, this could make them more amenable to breaking out their checkbooks to pay for the new generation.

As of yet, it is unclear whether the new generation capacity would feed data centers via a private wire or through the grid, but it is increasingly clear that something needs to be done about the spiraling costs across the region.

An interesting wrinkle of the announcement was the fact that the RTO itself was not invited to participate, which raises serious questions about the support of the plan. However, with bipartisan backing, it seems likely that PJM will have to oblige and hold the auction as planned to avoid the wrath of an increasingly assertive President.

Following the announcement, PJM released a statement outlining a set of board-approved actions aimed at accommodating data centers and other large new electricity users.

The measures include the immediate launch of efforts to secure additional power supplies. PJM also said it will enhance load forecasting, expand the role of states, and explore options that would allow large customers to supply their own generation or participate in a connect-and-manage approach. Additional steps include establishing a fast-track interconnection process for state-backed generation projects and beginning a backstop procurement to address near-term reliability risks.

"This is not a yes/no to data centers," PJM board chair and interim president and CEO David Mills said in a statement. "This is, 'How can we do this while keeping the lights on and recognizing the impact on consumers at the same time?'"

While the plan’s ability to materially lower prices or accelerate near-term capacity additions remains uncertain, it has already prompted a more proactive response from grid operators, utilities, regulators, and data center developers grappling with the pace and cost of AI-driven load growth.

The reaction to the news has been mixed. Amazon responded to the news with a positive spin. In a statement, the company said: “We share the goal of ensuring affordable, reliable energy for American families and our economy, and we applaud the bipartisanship emerging to tackle America's outdated grid challenges. Amazon is paying our full energy costs and is committed to ensuring our data centers don’t increase consumers’ electricity bills, and we've been clear that every major energy user should do the same.”

In contrast, environmental groups, such as Earth Justice, argued that the move could have drastic impacts on carbon emission levels. “If the Department of Energy were serious about affordability, it would be greenlighting clean energy, not taking extraordinary, unlawful measures to stop the quickest and cheapest solution we have. The auction proposed today might help protect consumers - but only if it’s designed and implemented right. If the auction is badly designed, it could lock in dirty, expensive infrastructure and harm already overburdened communities–even where states, citizens, and tech companies all want clean energy,” said Nick Lawton, Earthjustice attorney.