By Frank Brill, EnviroPolitics Editor
With elections looming in November for New Jersey’s Governor and Assembly, both parties are striving to duck voter backlash as electricity prices surged this week due to a nearly tenfold increase in PJM Interconnection’s capacity market auction.
Democratic senators blame PJM for delaying renewable energy projects, which has led to supply shortages and higher prices. Republicans argue that Governor Phil Murphy’s renewable-heavy energy agenda is responsible for the price hikes.
Meanwhile, in new legislation, the Board of Public Utilities (BPU) has been tasked with investigating PJM’s role in the price surge.
New Jersey Advances Legislation to Study Data Centers’ Impact on the Grid:
On Monday, the state Senate passed a bill requiring the BPU to study how data centers affect electricity rates. The study will determine if ratepayers are unfairly burdened by costs associated with new transmission and generation facilities for data centers.
AI-focused data centers are expanding rapidly in New Jersey, increasing electricity demand. The legislation also directs the BPU to investigate PJM’s reliability pricing model and work with neighboring states on energy reforms.
“The problem begins and ends with a grid that doesn’t work. We are not investing enough money in this grid. The grid is held together by chewing gum, toothpicks, and bobby pins,” said Sen. Bob Smith (D-Middlesex), who chairs the chamber’s energy panel. “So now anyone who wants to enter the grid has to get an approval for a connection, and in the case of New Jersey, for the last two-and-a-half years, we’ve had 79 projects in the queue that PJM would not approve.”
Republicans argue that the investigation should also include the BPU itself, questioning its transparency and effectiveness.
New Jersey isn’t the only state grappling with energy challenges, particularly as demand surges due to AI-driven data centers and the transition to renewable energy. Here are a few notable examples:
- Texas: The state has faced grid reliability issues, especially during extreme weather events. The rapid expansion of AI data centers and cryptocurrency mining has significantly increased electricity demand, putting strain on the grid.
- California: High electricity costs and grid reliability concerns persist, particularly as the state transitions away from fossil fuels. Efforts to integrate more renewable energy sources have led to challenges in balancing supply and demand.
- New York: Rising energy costs have prompted state regulators to explore affordability measures, including low-income discount rates. The state is also working on grid modernization to accommodate growing electricity demand.
- Illinois: The state is investing heavily in clean energy but faces challenges in ensuring affordability and reliability as coal plants retire and renewable infrastructure scales up.
Related:
NJ wants to be an artificial intelligence leader. Does it have the energy?
Wall St. Is All In on A.I. Data Centers. But Are They the Next Bubble?
A 20 Percent Electric Bill Surge Tests New Jersey’s Climate Goals
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