What PJM's power shortfall means for where AI data centers get built next

The PJM data center power shortfall is forcing operators to rethink where new capacity gets built, as PJM Interconnection faces significant power supply constraints amid rising demand from new data centers. PJM reported that only a reduced amount of new generation was added in 2025 compared to 2023 ¹. The interconnection queue backlog has grown, and in 2025, a majority of data center interconnection requests faced delays or denials ¹. PJM planning documents project that electric peak demand will rise annually through 2028, while gas demand is expected to decline each year, reflecting a divergence as more customers shift to electric heating ¹. PJM has implemented a moratorium on new data center interconnections in certain zones due to insufficient generation capacity to support projected load growth ⁴. As a result, operators and universities must prioritize sites with confirmed grid capacity and where local regulators have established clear approval processes for new generation Data Center Moratorium Tracker.

How PJM’s generation mix and forecasts are changing

PJM Interconnection added a limited amount of new generation in 2025, a decrease from previous years ¹. Therefore, the overall pipeline for new power sources has slowed significantly. Nationally, the land-based wind pipeline shrank in Q2 2026, and at least 44 GW of wind projects remain stuck in review at the U.S. Department of Defense, according to the American Clean Power Association ². Because of these delays, developers are experiencing longer wait times for project approvals. Average national wind power purchase agreement, or PPA, prices rose in Q2 2026 compared to the previous year ². Meanwhile, solar PPAs decreased from the previous quarter but remained above the previous year’s level ².

PJM projects that electric peak demand will continue to rise through 2028, but gas demand is expected to decline during the same period due to increased electric heating and efficiency measures ¹. This shift indicates a changing role for natural gas in the region.

The role of natural gas and solar in PJM’s future

Natural gas remains a significant resource in PJM but is projected to decline through 2028 as more customers switch to electric heating ¹. Solar generation is becoming increasingly cost-competitive compared to wind, according to recent PPA data ². However, transmission and siting constraints are limiting new solar projects in certain areas of PJM ¹.

Transmission and interconnection constraints shaping site selection

In 2025, PJM imposed a moratorium on new data center interconnections in some zones due to insufficient generation capacity, approving only a limited number of requests in those areas ¹. A large portion of data center interconnection requests in affected zones were denied or deferred that year ¹. As a result, developers must now focus more on zones with confirmed transmission capacity and clear regulatory approval processes Data Center Moratorium Tracker.

Forecast uncertainty and its impact

PJM’s gas and electric demand forecasts are diverging due to differences in heat pump adoption rates between electric and gas scenarios, reflecting changing customer behavior ¹. This divergence creates uncertainty for planning new loads, such as data centers. PJM uses an integrated planning approach to coordinate these forecasts and avoid overbuilding or underbuilding infrastructure ¹. However, the delay between updating forecasts and constructing new facilities means that sites relying on projected capacity may face unexpected challenges if forecasts change or if new load exceeds available capacity.

What this means for site selection

Developers should prioritize locations with confirmed transmission capacity and established regulatory pathways for new interconnections Data Center Moratorium Tracker. Sites where PJM’s long-term capacity plans align with expected load growth and where competitive solar resources are available are more likely to succeed ². Since wind PPAs have become more expensive and face regulatory hurdles, relying mainly on wind increases project risk ². Operators should consult PJM’s latest capacity reports and interconnection queue status before finalizing a site selection.

AI-driven grid forecasting and its impact on data center planning

How AI tools change grid forecasts

Santee Cooper is using Google’s AI tools to improve weather and load forecasting ³. This advancement enables the utility to utilize Google’s WeatherNext 2, which provides probabilistic forecasts up to 15 days in advance ³. Such detailed forecasts are significant because a one-degree change in weather can alter power demand by about 100 MW per hour ³. Therefore, this level of precision is crucial for data center operators who need dependable power at their chosen sites ³.

From better forecasts to better site decisions

Santee Cooper is also employing Google Cloud’s Gemini Enterprise Agent Platform to create an agent for rapid, scenario-based financial planning, especially with a $10 billion grid-expansion budget ³. As a result, utilities can plan transmission and generation more reliably ³. For data center operators, this means site power availability can be estimated more accurately before construction begins ³. In addition, these improved forecasts enable operators to avoid locations where power shortages or high price volatility are likely Data Center Moratorium Tracker. Meanwhile, information from PJM’s capacity reports and interconnection queue status helps identify areas where new load can be accommodated Data Center Moratorium Tracker.

AI forecasting and price volatility

AI-driven forecasting reduces uncertainty in weather and load predictions, which can influence electricity prices ³. Consequently, utilities are able to manage reserves and set prices with less volatility ³. For data centers, this leads to more stable operating costs and fewer unexpected price changes Data Center Moratorium Tracker. Specifically, operators should consider how recent AI upgrades at a utility might affect local price signals before entering long-term agreements.

Connecting forecasts to site selection

Utilities that implement AI forecasting may update their transmission and generation plans more frequently ³. For example, Santee Cooper’s adoption of agentic and generative AI can accelerate scenario-based planning for large projects like grid expansion ³. Data center developers should therefore align their site selection with the most recent utility forecasts and interconnection studies Data Center Moratorium Tracker. First, sites where utilities are expanding transmission and using advanced digital planning tools are more likely to support new data center loads without delays ³. Second, these sites typically offer clearer capacity documentation and fewer regulatory obstacles.

What this means for operators

AI forecasting tools are making power availability and pricing easier to predict for some utilities ³. Operators should therefore request the latest AI-enabled forecasts and scenario analyses from utilities before finalizing a site Data Center Moratorium Tracker. Ultimately, this approach can help reduce the risk of delays or unexpected costs after a data center is built.

Practical steps for choosing and securing a site in the next 12 months

Start by checking the local utility’s latest transmission and generation plans. First, in ERCOT, the average hourly load for the week ending August 29, 2026 was 73.7 GW, reflecting sustained high demand and tighter grid access ⁴. Next, ERCOT is currently auditing new data center interconnection proposals following a recent moratorium on new data center connections ⁴. Additionally, in PJM, utilities are updating forecasts and interconnection queues frequently. For example, Santee Cooper is using AI tools for scenario-based financial planning tied to a $10 billion grid-expansion budget ³. Therefore, request the most recent capacity reports, AI-enabled load forecasts, and lists of sites slated for near-term transmission upgrades or digital planning pilots ³. As a result, sites with scheduled upgrades may have clearer timelines for power delivery.

Then, review the interconnection queue and any moratorium status. Specifically, in ERCOT, the grid operator is auditing new data center interconnection proposals after a recent moratorium ⁴. Meanwhile, average hourly load in ERCOT for the past six weeks has exceeded previous records, reaching 74.5 GW for the week ending August 22, 2026 ⁴. Consequently, confirm whether your site is subject to a queue freeze, additional review, or study delays, and ask the utility for the expected timeline and any additional fees or requirements ⁴.

After that, secure a firm power contract early. In fact, industry reports show that demand from data centers and hyperscalers is increasing, with utilities reporting that offtake announcements for clean energy were up 23% year over year in Q2 2026 ². Thus, lock in a contract that guarantees delivery during peak periods and includes clauses allowing exit if grid constraints delay service. Moreover, request the utility’s scenario-based forecasts to understand price and availability under different load conditions ³.

Additionally, check the site’s water and cooling requirements against local regulations. Notably, confirm the site’s permitted water withdrawal and any planned regulatory changes using the SAVRN Water Tracker SAVRN Water Tracker.

Furthermore, engage with local permitting authorities early. Because utilities and regulators are coordinating on large projects, delays can occur if site reviews are not aligned with grid upgrades ³. Hence, align your permitting schedule with the utility’s projected in-service date for transmission.

Finally, monitor the site regularly. For instance, use the SAVRN Data Center Moratorium Tracker to track changes in interconnection rules or transmission timelines Data Center Moratorium Tracker. Ultimately, update your risk assessment monthly and adjust your backup site list based on the latest utility and regulatory reports.

1. Request the latest utility transmission and load forecasts for your short-listed sites
2. Confirm interconnection queue status and any moratorium rules
3. Negotiate a firm power contract with peak-period guarantees
4. Align water and cooling plans with local regulations
5. Coordinate permitting with the utility’s upgrade schedule
6. Monitor for rule changes using the SAVRN Data Center Moratorium Tracker

How SAVRN builds for this

SAVRN builds AI factories that generate their own power on site and run water-free cooling, with a training institute at the front of every campus that reskills the local workforce. SAVRN also publishes and maintains public research tools that track the same trends this article covers: the Data Center Moratorium Tracker, the Water Tracker, the Data Center Delay Tracker, the Grid Operator Watchlist, the Capital Atlas and the US Data Center Map.