AI craze drives sky-high energy bills! America's largest power grid electricity costs hit a new high of $16.1 billion

Notice that businesses and households in the largest coverage area of the US power grid will pay a record 16.1 billion US dollars to ensure power supply, stemming from the surge in demand triggered by the explosion of artificial intelligence. According to data from PJM Interconnection, the operator of the central grid stretching from the Midwest to the Atlantic, capacity costs paid to power generation companies this year have exceeded the historical peak of 14.7 billion US dollars from last year, causing the per megawatt-day capacity price to rise from 269.92 US dollars to 329.17 US dollars. Artificial intelligence data centers are driving the most intense growth in electricity demand in the US in decades, leading to a continuous increase in residential electricity bills. This has made the PJM annual capacity auction (previously only of interest to power traders and plant owners) a focus closely tracked by politicians and consumer rights organizations. Although PJM did not specify how much of the expected demand growth is related to data center construction, the grid operator stated that the AI boom is likely the main reason for the increase in auction prices this year. Stu Bresler, Executive Vice President of PJM, said at a media briefing, "Growth in demand is mainly coming from large loads and new data centers, " resulting in higher stock prices for Constellation Energy and Talon Energy in after-hours trading in New York on Tuesday. Artificial intelligence boom driving record-breaking capacity costs in the largest US power grid According to Bresler, this auction locked in electricity supply for the coming year starting in 2026, with wind capacity increasing by over 2 gigawatts and natural gas generation decreasing by almost 3 gigawatts. The final electricity mix will be adjusted to be 45% natural gas, 21% nuclear, 22% coal, 4% hydro, 3% wind, and 1% CECEP Solar Energy. This auction was the first to set price floors and ceilings, with the range set at 177.24 to 329.17 US dollars (the price reached at this auction). The 600% surge in capacity prices last year triggered a political storm, prompting PJM to reach an agreement with Pennsylvania Governor Josh Shapiro to essentially limit profit increases for two years, making the auction prices, which have fluctuated violently in recent years, more predictable. Despite the overall increase in costs, the price ceiling mechanism alleviated pressure on the users with the highest price increases in the last auction. Exelon's Baltimore area had a last price of 466 US dollars, while Dominion Energy's Virginia area was about 444 US dollars. Bresler stated that the largest increase in consumer electricity bills will be kept between 1.5% and 5%. Jon Gordon, Policy Director of the non-profit clean energy organization "Advanced Energy Alliance," pointed out that the rapid increase in demand brought by the rapid commissioning of large data centers has kept the profits of power generators high. He added that these new facilities consume electricity equivalent to a town's scale, coinciding with the closure of a large number of old power plants, delays in investment in new power sources, and grid upgrades. Barclays analyst Nick Cambanella previously predicted that the megawatt prices surpassing those in the 2024 auction would benefit independent power generators such as NRG Energy, Talon Energy, Constellation Energy, and Vistra. So far this year, these companies have invested over 34 billion US dollars in mergers and acquisitions, mainly acquiring natural gas power plants to meet the explosive demand of the AI industry (especially in the PJM area).