Skip to content
Welcome, thoughtbot's Giant Robots listeners!Start here
Data Centres: Boom and Backlash
25JUL

PJM cuts backstop target to 9 GW

3 min read
11:23UTC

PJM restructured its September reliability backstop to a bilateral-first model targeting roughly 9 GW, down from 14.9 GW, per a Jefferies estimate published around 19 May.

IndustryDeveloping
Key takeaway

PJM shrank its September backstop to 9 GW, pushing data centres to contract their own firm power.

PJM Interconnection, the largest grid operator in the United States, serving roughly 65 million people across thirteen states, revised its September Reliability Backstop Procurement to a bilateral-first structure targeting roughly 9 GW, down from a prior 14.9 GW target, according to a Jefferies estimate published on or around Tuesday 19 May.⁠1

The backstop is the mechanism by which PJM secures emergency capacity to keep the lights on when demand outpaces supply. A bilateral-first design pushes large loads to strike their own supply contracts before the grid steps in to procure the remainder centrally, which is how the target shrank by nearly six gigawatts. The change followed directly from the warning PJM's board sent thirteen state governors that grid-reinforcement costs would otherwise drift onto household bills.

For data-centre operators, the revision narrows the pool of capacity the grid will backstop on everyone's behalf and widens the share they must arrange themselves. It is a quieter version of the same cost-allocation fight Oregon settled by tariff: who lines up the power, and who pays when the grid has to fill the gap.

Deep Analysis

In plain English

PJM Interconnection is the company that runs the electricity grid serving 65 million people across 13 US states, from Illinois to New Jersey. Every year it buys a reserve of extra power capacity to cover emergencies, called the Reliability Backstop Procurement (a backup supply purchase). Think of it like buying extra emergency generators for the whole grid. In May 2026, PJM changed how it runs this process. Instead of a competitive auction where power suppliers bid against each other, it switched to a bilateral-first system, meaning it negotiates direct deals with individual generators rather than running an open competition. The target amount of backup power dropped from 14.9 gigawatts to around 9 gigawatts. This reduces the cost that might otherwise land on household electricity bills, but critics say it also reduces price transparency, because direct deals are private rather than openly priced.

What could happen next?
  • Consequence

    PJM's bilateral-first backstop sets a precedent that competitive capacity auctions are politically unacceptable when data-centre load is the primary driver of reliability gaps, potentially reshaping how all 13 PJM-state utilities procure backup capacity.

  • Risk

    Bilateral contracts' confidential pricing removes the cost-attribution transparency that PJM's 19 May governor warning was designed to establish, creating information asymmetry between generators and state regulators at the moment regulators most need cost data.

First Reported In

Update #6 · Oregon bills data centres, not homes

Utility Dive· 10 Jun 2026
Read original →
Causes and effects
This Event
PJM cuts backstop target to 9 GW
The shrunken target shows PJM leaning on operators to contract their own firm power rather than the grid procuring it centrally, narrowing the volume households might end up paying for.
Different Perspectives
Mohsen Rezaei
Mohsen Rezaei
The senior Iranian security official and former IRGC commander told Press TV that US-linked technology infrastructure in the region could become a target if war resumes. He named the UAE and valued the assets at more than US$2 trillion, without a breakdown.
Mykhailo Shelemba
Mykhailo Shelemba
Datagroup's chief executive says the Kyiv data centre hit on the night of 18 to 19 October is beyond repair. Services continue from backup sites, and no staff were hurt.
Kristen Umstattd
Kristen Umstattd
The Loudoun supervisor voted against fast-tracking Amazon's rezoning of the Ashburn campus. She said there were no figures yet on homes, school or road costs.
Akishima residents' litigation group
Akishima residents' litigation group
The group formed on 18 October and plans to sue Nihon GLP by year-end to stop eight data-centre buildings. Its lawyers will argue rights to life, health, clean water and a natural environment after mediation failed in August.
Óscar López
Óscar López
Spain's Digital Transformation minister said on 22 October he could not confirm when the data-centre decree will be approved. He added that Google has always committed to investing in Spain.
Google
Google
Google said it would comply with LVV's order to stop preparatory works at Muhos and Kajaani until environmental assessments finish. A spokesperson conceded the company had fallen short.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.