Data centers strain PJM grid, threaten Trump's Made in America

Data centers are pushing electricity demand in PJM Interconnection territory so high that capacity prices rose from $28.92 per megawatt-day in 2024 to $329.17 per megawatt-day in 2026, and PJM forecasts a 6.6 gigawatt shortfall starting in 2027. That surge has translated into sharply higher factory bills: Belden Brick’s monthly electricity charge climbed from $1,600 to $12,000, and Ohio steelmaker Metallus says its electricity costs jumped 70 percent since 2024, adding $15 million a year.

How are data centers driving up grid costs?

PJM capacity prices and booming AI data center projects are the direct drivers: capacity prices rose from $28.92 per megawatt-day in 2024 to $329.17 in 2026, reflecting tightening supply and higher demand from large data center builds. States in PJM territory attracted large AI data center projects with substantial electricity needs, a trend Reuters linked to the capacity-price increases and PJM’s own forecast that demand will outstrip supply by 6.6 gigawatts starting in 2027, which the Wall Street Journal describes as "equivalent to more than six nuclear power plants." The data center boom has also increased demand for steel used in construction, even as it stresses the grid.

Who is paying the price and how big is the hit?

Manufacturers in PJM territory are seeing faster electricity bill growth than other business or residential customers. The Belden Brick Company’s monthly bill jumped from $1,600 to $12,000 after a higher monthly capacity charge. The Steel Manufacturers Association warned that steel companies in the region are paying tens of millions of dollars more per year in power costs. Electricity represents 20 to 40 percent of the total production costs of making steel. Each electric arc furnace for steelmaking draws 40 to 200 megawatts when operating, and the entire US steel industry can draw up to 11 gigawatts at peak production. Metallus reported a 70 percent rise in electricity costs since 2024, equating to roughly $15 million extra annually.

What has the government and industry done so far?

The White House pushed Big Tech firms to sign a Ratepayer Protection Pledge to help fund new generation and transmission, though the pledge lacks a meaningful enforcement mechanism. The administration and state governors also urged PJM to hold a one-time backstop auction to buy new capacity. Despite those moves, the United States faces large obstacles in adding generation and transmission quickly enough. In 2025, projects totaling 266 gigawatts of generation capacity were canceled, a figure Michael Thomas of the Cleanview data platform said equals 25 percent of America’s current electricity generation capacity, with clean energy projects accounting for 93 percent of those cancellations.

Why it matters

Higher capacity prices and strained grids raise production costs for energy-intensive manufacturers, eroding profit margins that the Made in America agenda seeks to restore. Steelmakers and brick manufacturers face both higher operating expenses and the risk of production outages if local grids become overwhelmed, undermining competitiveness. The cancellations of 266 gigawatts of proposed generation in 2025, and the concentration of data center projects in PJM states, mean the mismatch between where demand is growing and where new supply is being built could persist.

What to watch

Track PJM capacity auctions and the 2027 supply forecast to see if shortfalls materialize, and watch whether the Ratepayer Protection Pledge gains enforceable commitments or if states permit new transmission and renewable projects to proceed. Also monitor announcements from large AI data center developers and any state-level moves to shift new projects outside constrained PJM zones.