Trump administration is asking technology companies to buy power plants they may not use for $15 billion

The Trump administration wants to add $15 billion worth of new power generation to the largest power grids and wants tech companies to pay for it, even if they don’t need that capacity.

The White House and the governors of several states in the region are calling on grid operator PJM to hold an auction for a 15-year contract for new generation capacity. The administration has said it wants tech companies to bid on contracts, even if the data centers ultimately don’t need the power. Demand from data centers is expected to nearly triple over the next decade.

PJM said it is reviewing its “Declaration of Principles” and will soon announce the results of a months-long planning process to add new capacity to the grid.

However, the statement is not binding, and PJM does not seem thrilled that the regime is trying to force its hand behind the scenes. “There’s not much to say about this,” PJM spokesman Jeffrey Shields told Bloomberg yesterday. “We haven’t been invited to the event they’re apparently holding tomorrow, so we won’t be participating there.”

PJM Interconnection covers 13 states in the Mid-Atlantic and Midwest, serving more than 65 million people and includes a data center hotspot in Northern Virginia. Electricity prices in the region in 2025 will rise by about 10-15% compared to the previous year.

According to Monitoring Analytics, PJM’s peak load has increased by 10% over the past decade and is expected to increase by another 6.5% in 2027.

Much of the blame lies at the feet of technology companies and data center operators, who are using more and more power to power AI.

Natural gas prices are also a factor. PJM relies heavily on fossil fuels, and prices have been rising recently. PJM’s independent watchdog, Monitoring Analytics, says that about 60% of the price increase in 2025 will be due to soaring fossil fuel prices.

After more than a decade of zero growth, demand for power from data centers is surging, leaving power grid operators in a bind.

Building a new fossil fuel power plant is a multi-year project costing hundreds of millions of dollars. Many utilities and power companies are hesitant to commit to these schedules and spending. If the AI ​​boom wanes, it could leave unprofitable power plants built to run for decades.

Tech companies traditionally not in the power business are turning instead to renewable energy, which is cheaper, more modular, and faster to deploy. Solar power and batteries were early winners. A typical solar power plant can be built in about 18 months and can be built in stages, allowing you to start delivering power before it’s complete. This will align more closely with data center construction and allow businesses to manage risk on a similar schedule.