By ByteBot
The Trump administration and northeastern governors announced today an emergency power auction to force Big Tech companies to pay for data center electricity costs. The plan directs PJM Interconnection—the nation’s largest grid operator covering 65 million people—to hold an unprecedented auction where only tech companies can bid on 15-year contracts for new power generation. The goal: stop American consumers from paying the $23 billion in data center-related costs currently passed through utility bills.
If this proceeds, expect cloud costs to increase. When Big Tech must pay for power infrastructure directly, those costs don’t disappear—they get passed to developers through higher AWS, Azure, and Google Cloud pricing. Every developer using cloud services could feel the impact.
The Power Crisis Driving the Policy
Data centers are consuming enormous electricity, and the numbers are staggering. U.S. data centers used 183 terawatt-hours in 2024—more than 4% of the nation’s total electricity consumption. AI data centers alone will hit 90 TWh annually by 2026, a tenfold increase from 2022. Goldman Sachs projects AI will drive a 165% increase in data center power demand by 2030.
PJM Interconnection’s capacity prices tell the story: $28.92 per megawatt-day in 2024/25, exploding to $329.17 in 2026/27. That’s an 11x increase in two years. Data centers accounted for 40% of PJM’s $16.4 billion capacity costs in the December 2025 auction. The latest auction cleared at the maximum allowed price—$333.44 per megawatt-day.
Virginia’s “Data Center Alley” exemplifies the strain. Loudoun County hosts 43 million square feet of data centers requiring 4,140 megawatts—more than double Beijing, the next-largest market globally. A single modern data center consumes as much energy as 80,000 households annually. Three Democratic senators cited data showing electricity bills soared up to 267% over the past five years in regions with significant data center activity.
Tech Giants Are Already Scrambling
Big Tech knows power is the bottleneck. Just last week, Meta announced nuclear energy deals for 6.6 gigawatts by 2035—enough to power 5 million homes. Partners include Vistra, TerraPower, and Oklo, with 2.1 GW coming from existing Ohio plants for Meta’s Prometheus supercluster.
Microsoft isn’t sitting idle either. The company secured agreements with Constellation Energy to restart Pennsylvania’s Three Mile Island reactor and signed a 10.5-gigawatt renewable energy deal with Brookfield—the biggest corporate clean-energy purchase ever announced. Power availability has become the #1 factor in data center location decisions, surpassing connectivity, land costs, and tax incentives.
The industry needs $3 trillion in infrastructure investment through 2030. Energy isn’t just a cost center—it’s the constraint determining who wins the AI race.
The Implementation Reality Check
Here’s the catch: this “statement of principles” isn’t a legal mandate. PJM Interconnection received no advance notice of the plan and hasn’t agreed to hold the auction. ClearView Energy Partners analysts noted the nonbinding nature doesn’t compel PJM to act, though pressure from the administration and multiple state governors could motivate a response.
The auction timeline targets completion by September 2026. The structure is unprecedented—15-year contracts limited exclusively to technology companies. The White House estimates this could underpin approximately $15 billion in new power plants. But will tech companies simply pass these costs through to cloud customers? Almost certainly.
Trump stated on Truth Social: “I never want Americans to pay higher electricity bills because of data centers…the big technology companies who build them must ‘pay their own way’.” Whether this auction achieves that goal or just shuffles costs from utility bills to cloud invoices remains unclear.
What Developers Should Watch
Consumer electricity bills in the PJM region will rise 1.5% to 5% starting June 2026—that’s already locked in, separate from this auction. Microsoft announced “major changes” expected this week to address consumer cost concerns. PJM’s decision on whether to hold the auction will come sometime before the September deadline.
For developers, the implications are straightforward: monitor cloud provider pricing announcements, especially for AWS, Azure, and Google Cloud services in PJM-region data centers. Consider geographic diversification for infrastructure deployments. Budget conservatively for cloud costs given the regulatory uncertainty. Evaluate alternatives like edge computing or deployments in regions outside PJM’s footprint.
This policy marks the first government intervention forcing industry-specific power subsidies. The bipartisan governor support from Pennsylvania, Ohio, and Virginia signals this isn’t a partisan flash in the pan. Energy has become the primary constraint on AI growth—not compute power, not memory capacity, but electricity availability and cost.
The fairness question remains: should consumers subsidize Big Tech’s AI ambitions through utility bills, or should tech companies pay directly and pass costs through cloud services? Either way, someone pays. The Trump administration is betting that making the subsidy explicit—and forcing tech to foot the bill—will reduce the burden on residential ratepayers. Whether that bet pays off depends on PJM’s response and how tech companies structure their pricing in the months ahead.
