Risks of Rapid Data Center Growth in PJM
On behalf of Sierra Club, Synapse analyzed the impacts of projected data center load growth in the PJM region. Data centers are driving a significant acceleration in load growth projections across the country, including in PJM. Without proactive planning and thoughtful policy intervention, this level of projected load growth has the potential to greatly increase emissions and raise energy costs for other ratepayers.
We examined the potential impact of data center load growth on PJM system costs, carbon dioxide emissions, resource builds and dispatch, and average residential bills. Using capacity expansion modeling, we examined prospective future scenarios with and without data center load growth, absent any emissions mitigation strategies.
Our modeling found that data center load are projected to cause electric sector carbon dioxide emissions to increase by 1,014 million short tons (35 percent increase) over the study period.
We also found that data center loads cause PJM residential bills to increase by 10 percent in the near term and 4 percent in the long term, primarily to higher capacity and energy prices. Increased energy demand from data centers drives up reliance on inefficient, high-cost power plants, especially in the near term. This shifts the energy and capacity clearing prices higher along the supply curve.
Furthermore, we examined how different approaches to cost allocation could either increase or decrease these projected residential bill impacts. To avoid increasing costs to residential ratepayers, we found that data center rates would need to increase by 53 percent in the near-term and 11 percent in the long term, relative to their projected rates, in order to offset the higher energy and capacity market prices that they are driving. If data centers receive rate reductions, such as through economic development tariffs, costs would be shifted to residential ratepayers. We found that rate discounts of 10 to 30 percent for data centers could cause residential bills to increase by $1.50 to $8.40 per month, depending on the level of discount and time period.
A factsheet summarizing our findings and a more detailed slide deck are linked below.