A PJM market monitor estimate has sharpened focus on who pays for grid upgrades, as regulators weigh whether households, businesses or data centers should absorb rising power-system costs.
Rapid expansion of AI-driven data centers is intensifying pressure on U.S. power markets and could add about $23 billion in electricity costs for consumers across 14 Mid-Atlantic and Midwest states through at least the end of 2028. The estimate, tied to PJM Interconnection’s market monitor, has widened scrutiny of how utilities and regulators should allocate the cost of new substations, transmission upgrades and generation needed to serve fast-rising demand. Some expenses, such as a dedicated power line for an individual facility, can be assigned directly to a data center operator, but broader grid investments are harder to divide because they can benefit the wider system. The debate also extends to rate design, including coincident peak demand charges that large users can reduce by cutting usage during system peaks. Electricity use by U.S. data centers was estimated at 4.4% of total consumption in 2023 and is projected to reach 6.7% to 12% by 2028, according to a Department of Energy report by Lawrence Berkeley National Laboratory, while the Electric Power Research Institute projects data centers could account for 9% to 17% of U.S. electricity demand by 2030.