Podcast Summary: The Journal.

Episode: "The Power Grid's AI Problem"

Hosts: Ryan Knudsen & Energy Industry Expert
Date: January 21, 2026

Overview

In this episode, The Journal delves into the mounting stress that artificial intelligence (AI) data centers are placing on America's largest power grid operator, PJM Interconnection. Hosts Ryan Knudsen and a featured energy industry expert discuss why surging demand from tech giants like Google and Microsoft is causing power shortages, rate hikes, and possible threats of blackouts. Policymakers, grid operators, and the tech industry are now scrambling for solutions, raising critical questions about the future of America's energy infrastructure.

Key Discussion Points & Insights

1. PJM Interconnection and Its Growing Challenge

• PJM's Role:
  • PJM manages the electricity grid for 13 states from New Jersey to Kentucky, serving about 67 million people.
  • It's compared to "air traffic control for the electricity market," ensuring supply and demand remain balanced. [00:45]
  • Quote: “Really none of us should know who PJM is... Normal people should not really be thinking about who their grid operator is...” – Energy Industry Expert [00:30]
• New Demand from AI Data Centers:
  • AI data centers are likened to "bottomless" customers, each consuming as much power as an entire city. [01:20]
  • PJM faces an unprecedented challenge: major tech companies building data centers, especially in "Data Center Alley" (Northern Virginia), all requiring vast amounts of electricity.

2. From Flat Demand to a Power Crunch

• Historical Demand Trends:
  • For decades, US electricity demand was flat, countered by efficiency gains such as LED lights and better buildings. [04:16]
  • “There really wasn't a lot of increase in power demand... a lot of things got more efficient.” – Energy Industry Expert [04:16]
• Current Surge:
  • Now, PJM expects power demand to grow 4.8% per year, a sharp spike that the grid isn't prepared for. [05:29]
  • This demand is compared to the societal upheaval that followed the widespread adoption of home appliances or air conditioning. [05:48]

3. Power Generation Shortages, Plant Closures, and Price Hikes

• Depleted Supply:
  • In recent years, plants closed due to low prices and environmental regulations. Supply of reliable power has dropped. [06:30]
  • “They had too much power... you couldn't afford to operate some of these power plants.” – Energy Industry Expert [06:30]
• Consequences:
  • Prices are rising as demand outpaces shrinking supply, with bills increasing up to 20% in places like New Jersey. [07:21, 07:46]
  • Quote: “Your energy costs are going to go up again.” – Energy Industry Expert [07:21]
  • Blackouts are now a real risk during peak demand periods.

4. Why Building New Plants Isn’t Easy

• Infrastructure Bottlenecks:
  • Power plants and grid updates take years, while data centers are built much faster. Materials, labor, and equipment shortages compound delays. [08:46]
  • Quote: “You can't get a turbine for the next four or five years.” – Energy Industry Expert [08:46]
• Planning Challenges:
  • Data center companies pick locations based on tax incentives, making it hard for utilities to predict where to build new generation. [09:07]
  • Economic risks abound: “You don't want to under build and not be able to serve customers. And you don't want to overbuild and then be charging people for... infrastructure that maybe wasn't needed.” – Energy Industry Expert [09:27]

5. Political Upheaval and Regulatory Responses

• States & Governors Respond:
  • Governors are upset over increased bills; some, like Pennsylvania’s, push for price caps. [10:11]
  • Price caps offer short-term relief but blunt incentives for private investment in new generation. [10:49]
  • Quote: “The price rising is supposed to be a market signal... to go build more [plants].” – Energy Industry Expert [10:57]
• Federal Involvement:
  • The Trump administration convenes a bipartisan meeting, resulting in directives for PJM:
    • 15-year guaranteed-price contracts for new power plant developers.
    • AI data center companies, rather than consumers, required to pay for this new generation. [12:01]

6. Proposed Solutions: Tech Carries More of the Burden

• "Bring Your Own Power":
  • New proposals ask data centers to supply their own on-site or nearby power generation (BYOP). [12:40]
    • Some centers may "island" themselves off the main grid temporarily or permanently. [12:58]
    • This approach is spreading nationally, especially in Texas, Tennessee, and Ohio.
• Demand Response:
  • Grid operator can request data centers to go offline or switch to backup power during peak periods. [13:38]
• Industry Pushback:
  • Trade groups for tech companies argue the grid’s woes are not solely their fault and point to underinvestment.
  • Quote: “They don't accept the argument that they are causing this problem... the grid and the system has just been underinvested.” – Energy Industry Expert [14:02]

7. Unresolved Uncertainty and the Path Forward

• Blackouts: Real But Unlikely (For Now)
  • The risk, though rising, remains mostly limited to extreme weather events and select peak hours. [15:01]
  • Quote: “I don't want to paint this picture of that. We're just careening into this era of rolling blackouts because I don't think that will be the case.” – Energy Industry Expert [15:49]
• Long-Term Outlook:
  • No quick solutions. The issue is still a “huge fight” in PJM, and uncertainty persists regarding the pace, location, and scale of future data centers and their power needs. [15:55]

Notable Quotes & Memorable Moments

• "A large data center can eat up a gigawatt of power or more... that's like an entire city."
  – Energy Industry Expert [01:20]

• "You can't get a turbine for the next four or five years."
  – Energy Industry Expert [08:46]

• "Bring your own power... you're seeing it in a lot of places in Texas and Tennessee and Ohio... large data center projects that are bringing on site power with them."
  – Energy Industry Expert [12:58]

• “They don't accept the argument that they are causing this problem... but that there are other issues.”
  – Energy Industry Expert [14:02]

• "We're just on the cusp of seeing all of this new demand... a lot of this is to be determined."
  – Energy Industry Expert [15:55]

Timestamps for Key Segments

• PJM & Data Center Demands: [00:05–01:38]
• Historical Power Trends & New Demand: [04:04–05:48]
• Supply Declines and Rate Hikes: [06:24–07:46]
• Infrastructure Challenges: [08:46–09:27]
• State & Federal Political Action: [10:06–12:01]
• Tech-Assumed Burdens (BYOP, Demand Response): [12:40–13:57]
• Industry Pushback & Uncertain Outlook: [14:02–16:47]

Conclusion

This episode reveals an electricity grid in transition, overwhelmed by a new age of AI and data computing. Policy, economics, and technology are colliding, forcing both government and industry to rethink the American energy future. While rolling blackouts are not imminent, the clash between surging digital demand and an overstretched grid appears far from resolved, setting the stage for ongoing conflict and innovation.