The Trump administration is urging major tech companies to underwrite roughly $15 billion in new power plants across the PJM grid, even if they never directly use the electricity. The goal is to lock in long-term capacity to meet surging data center demand, but the proposal collides with market design norms, corporate decarbonization strategies, and fears of stranded assets.
Proposal Seeks Long-Term Capacity Commitments
According to a White House–backed statement of principles developed with several governors in the PJM footprint, the grid operator would run a special auction offering 15-year contracts for new generation. Tech companies would be encouraged to bid for the capacity rights, effectively guaranteeing financing for new plants that could include gas-fired units or other firm resources.
That approach departs from PJM’s usual practice. The region’s Reliability Pricing Model typically secures one-year capacity commitments three years in advance, with resource-neutral competitive bidding. A 15-year procurement aimed at specific buyers would mark a notable intervention in the market and may require approval by the Federal Energy Regulatory Commission.
The $15 billion figure is substantial. Depending on technology mix and siting, it could support roughly 8 to 12 gigawatts of new firm capacity—enough to cover multiple peak-demand hours but also enough to saddle buyers with long-term liabilities if loads do not materialize as forecast.
PJM Reaction And Governance Complications
PJM Interconnection, which spans parts of 13 Mid-Atlantic and Midwestern states and serves more than 65 million people, said it is reviewing the principles and will soon release results from its ongoing capacity planning effort. The statement is nonbinding. A PJM spokesperson told Bloomberg the grid operator was not invited to the administration’s event and would not attend, underscoring the delicate politics surrounding any redesign of market mechanisms.
Any fast-track auction would face thorny questions: how costs would be allocated, whether incumbent generators could participate on equal footing, and how to prevent distortions that raise prices for consumers. Stakeholders in PJM have spent years debating reforms to accommodate state policies and evolving reliability needs; inserting a bespoke 15-year product aimed at a single buyer class could reopen those battles.
Data Center Demand and Energy Price Pressures
Officials argue the move is necessary because electricity demand tied to AI and cloud computing is rising sharply after a decade of flat growth. Monitoring Analytics, PJM’s independent market monitor, reports the region’s peak load has risen about 10% over the past decade and is expected to climb another 6.5% by 2027. Northern Virginia, the world’s densest data center cluster, continues to strain local capacity and transmission.
Prices have already responded. Retail electricity rates in parts of PJM were up roughly 10%–15% year over year in 2025, with the monitor attributing around 60% of the increase to higher fossil fuel costs—a reminder that gas-dependent grids remain exposed to commodity volatility. Recent North American Electric Reliability Corporation assessments have also flagged tighter reserve margins in several regions as load grows and older plants retire.
Even so, demand forecasts are uncertain. AI workloads are lumpy and evolve quickly; a slowdown in model training intensity or breakthroughs in efficiency could pare back growth just as new plants come online, amplifying the risk of overbuilding.
Why Tech Firms Are Wary Of Owning Plants
Tech companies have largely avoided owning fossil assets, preferring long-term contracts for renewables and storage that scale with their data centers. Utility-scale solar can often be built in about 18 months and deployed in phases, while battery projects can be added incrementally to firm up supply during peaks. That modularity mirrors data center construction schedules and keeps balance-sheet risk in check.
Cost matters, too. Analyses such as Lazard’s latest levelized cost of energy show new wind and solar—often paired with four-hour storage—competing favorably with new-build gas on a per-megawatt-hour basis, especially when fuel prices rise. Layer on corporate 24/7 clean energy commitments championed by companies like Google and Microsoft, and the idea of signing 15-year obligations for gas-heavy capacity becomes even harder to square with climate and investor expectations.
There are exceptions: some firms are piloting firm, zero-carbon options such as advanced nuclear or long-duration storage to complement renewables. But those efforts are targeted and experimental, not a wholesale shift into utility-style plant ownership.
What to Watch as PJM Weighs Long-Term Capacity Plan
PJM’s forthcoming planning report will signal how much new capacity the region believes is prudent and what products might be needed to assure reliability. Any special auction would likely trigger a FERC filing and months of stakeholder scrutiny. State regulators, who ultimately answer to retail customers, will press for guardrails that avoid socializing costs if private buyers walk away.
For now, the $15 billion push is less a done deal than a high-stakes attempt to shift who pays for the AI era’s power buildout. Whether tech companies accept long-term capacity risk—or continue doubling down on renewables, batteries, and targeted firm resources—will shape prices, emissions, and reliability across the nation’s largest grid.
