The Trump administration, alongside a bipartisan group of governors, requested PJM Interconnection—the country’s largest wholesale electricity market—to conduct a one-time “emergency” auction to supply data centers with new sources of power. The announcement on Jan. 16, 2026, signals a significant shift in energy policy aimed at meeting the rapid growth of electricity demand from hyperscale data centers.
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Under the proposal, data center owners could bid on 15-year power purchase agreements (PPAs) for newly built power plants. According to the U.S. Department of Energy (DOE), this emergency auction could support up to $15 billion in new generation. However, DOE notes that the data centers would be responsible for paying for the generation capacity whether or not they actually use the power.
PJM is currently reviewing the proposal. “We will work with our stakeholders to determine how this emergency auction aligns with a plan for handling data center interconnections,” the grid operator said in a social media post. PJM was not invited to the White House event announcing the initiative, according to PJM spokesperson Jeffrey Shields.
Any auction would require Federal Energy Regulatory Commission (FERC) approval. FERC Chairman Laura Swett has emphasized that connecting data centers reliably to the grid is a top priority, alongside ensuring affordable and stable electricity rates.
Capstone analysts cautioned that the governors’ and federal officials’ statement “lacks binding authority, reinforcing that this is policy signaling, not an imminent market reform.” Analysts estimate that a timeline of six to twelve months would be required before such an auction could realistically occur.
PJM oversees the electricity grid and wholesale power markets across 13 Mid-Atlantic and Midwest states plus D.C., serving roughly 67 million people. Normally, the grid operator conducts capacity auctions years in advance to ensure adequate electricity supply, paying power plant owners to remain available.
Rapid growth in data center development, particularly in northern Virginia, has dramatically increased demand for electricity. Much of this demand is based on projected future needs rather than confirmed usage, creating a mismatch between supply and demand. This imbalance contributed to soaring capacity prices in PJM’s last three auctions, with data centers accounting for nearly half—$23.1 billion—of the $47.2 billion total cost, according to PJM’s independent market monitor, Monitoring Analytics.
The market monitor has recommended that data centers only receive power from new sources to avoid reducing existing supply and to maintain grid reliability.
The proposal has received backing from the Edison Electric Institute (EEI), the trade group for investor-owned utilities, and some environmental advocates. “We support President Trump and the Governors’ focus on swift changes to help lower energy costs for customers and get more power plants online,” EEI President and CEO Drew Maloney said.
Independent power producer LS Power CEO Paul Segal added, “An emergency auction funded by large loads can be a useful bridge if it’s truly competitive. That means no price-cap extensions, real performance requirements (not paper capacity), and a competitive, technology-neutral process that prices grid access upfront and uses pathways suitable for new load.”
The Sierra Club also endorsed the plan, with Senior Advisor Jessi Eidbo noting, “We have been working continuously with lawmakers, advocates, and PJM, to ensure that our communities aren’t forced to pay Microsoft or Meta or any Big Tech company’s power bills.”
Following the announcement, shares of independent power producers operating in PJM fell sharply. Constellation Energy dropped 9.7%, Talen Energy fell 8.7%, Vistra Corp. declined 7.4%, and NRG Energy slid 3.3%, reflecting investor concerns about the implications of a dedicated auction for new generation.
The proposal also calls for reinstating a price cap and floor on PJM’s annual capacity auctions—a mechanism previously credited with reducing capacity costs by $13.1 billion in the two auctions where it was applied. Currently, the mechanism is not planned for the 2028/29 delivery year auction.
Originally reported by Ethan Howland, Senior Reporter in Utility Dive.
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