PJM launches emergency capacity auction as AI data centers strain the grid

PJM Interconnection, the largest US power grid operator, will run a one-time Reliability Backstop Procurement auction after its latest capacity auction fell 6,831 megawatts short of the region’s reliability requirement. Its board directed two federal filings on July 27, 2026.

The shortfall marks how fast AI data-center demand is outrunning power supply. PJM’s independent market monitor has said data-center load drove up capacity costs by $29.4 billion over the last four auctions, and the grid operator forecasts 70 gigawatts of load growth by 2038 while 15 gigawatts of generation has retired since 2022.

The backstop auction runs September 30 to October 21, 2026, targeting up to 15 gigawatts of new generation, demand response and distributed resources, at a raised price cap of $555 per megawatt-day and commitments of up to 15 years. Results are due in early December.

Separately, PJM’s Interim Resource Adequacy Service framework will require new large loads of 50 megawatts or more – the bracket most AI data centers fall into – to curtail during grid emergencies if they lack self-supply and have not secured alternative resources by June 1, 2027. In effect, hyperscalers may be asked to power down to keep the lights on for households.

The filings still need approval from the Federal Energy Regulatory Commission, and demand response cannot be conjured overnight. Whether 15 gigawatts of new capacity actually clears the backstop auction, and at what price to consumers, is the test.