FINWIRES · TerminalLIVE
FINWIRES

PJM Grid Power Prices Jump 76% as Data Centers Boost Demand

By

Wholesale power prices on the largest electric grid in the US surged by 76% in Q1, driven by soaring demand from data centers and intensifying pressure on grid operators to protect consumers from rising costs.

The total cost of wholesale power on the PJM Interconnection averaged $136.53 per megawatt-hour (MWh) in Q1, up from $77.78 per MWh in Q1 2025, an increase of $58.75 per MWh.

Monitoring Analytics said energy costs accounted for the largest share of the increase, rising $42.90 per MWh, or 78.5%. Capacity costs climbed $14.21 per MWh, a 398.1% jump, while transmission costs increased by $0.94 per MWh, or 5.3%.

Data centers require vast amounts of electricity, creating a new and consistent burden on regional power supplies.

Energy, capacity, and transmission were the three largest components of total wholesale power costs on the PJM Interconnection, accounting for 98.3% of the total in Q1. Energy made up 71.5% of the total cost, capacity 13.0%, and transmission 13.8%.

The Monitoring Analytics report also showed shifts in generation mix compared with Q1 2025. Coal-fired generation declined 1.7%, while natural gas generation rose 4.2%. Oil-fired generation increased sharply by 43.2%. Renewable output was mixed, with wind generation falling 4.7% and solar generation rising 15.0%.

The increase in wholesale costs comes amid ongoing debates over supply adequacy, rising demand from data centers and electrification trends, and the impact of changing generation patterns on grid reliability and pricing.

PJM Interconnection operates the largest wholesale electricity market in the US, spanning 13 states and serving millions of customers.

Related Articles

Commodities

US Natural Gas Update: Futures Climb on Small Inventory Build, Increased Cooling Demand Forecasts

US natural gas futures rose in after-hours trade on Thursday due to a smaller-than-expected storage build and supportive weather forecasts.Front-month Henry Hub futures and the continuous contract both rose by 1.96% to $2.92 per million British thermal units.The US Energy Information Administration reported an 85 Bcf increase in natural gas storage for the week ending May 8. The weekly inventory build was smaller than some forecasts as high as 91 Bcf, but largely in line with most analyst forecasts of an 84-87 Bcf build and close to the five-year average injection of 84 Bcf.Total working gas in storage climbed to 2,290 Bcf, with the surplus versus the five-year average holding near 140 Bcf. Inventories are now about 2.3% above year-ago levels and roughly 6.5% above seasonal averages, according to Trading Economics. By comparison, the same week last year recorded a larger storage injection of 109 Bcf.Weather forecasts also supported prices. Barchart, citing The Commodity Weather Group, said Thursday that forecasts turned warmer, with above-normal temperatures expected across the Midwest through May 18. The warmer outlook could lift natural gas demand from power utilities as air-conditioning use increases.Gelber & Associates said the latest forecast shift provides enough support for cooling demand to keep the market attentive to power-sector consumption, though not enough on its own to make the near-term decisively tight.BNEF data, cited by Barchart, showed US gas production fell to 107.6 Bcf/d on Thursday, down 2.2 Bcf/d from Wednesday, but up 1% from a year earlier.Lower-48 gas demand rose 3.7% year over year to 68.2 Bcf/d, up 400 million cubic feet per day from Wednesday.Feedgas flows to US LNG export terminals came in at 17.5 Bcf/d Thursday, down 1.8% from the prior week, but up 200 MMcf/d on the day. Gelber & Associates said "LNG remains the key swing factor outside of domestic weather, but net export demand is still running below recent monthly levels, and the market is waiting for fuller LNG service to restore a cleaner pull on feedgas."

Commodities

Market Chatter: White House Weighs Gas Tax Cut as Iran Conflict Pushes Fuel Prices Higher

The White House is reviewing emergency fuel-price relief options as US gasoline prices remain above $4.50 per gallon during the Iran conflict, Reuters reported Thursday, citing people familiar with the matter.The Trump administration is considering suspending the federal gasoline tax, a move that could lower pump prices by 18 cents per gallon.Officials previously viewed the proposal as unnecessary, but growing fuel costs and economic concerns are increasing pressure on the administration to act.One person familiar with the discussions said the White House now believes Trump needs "a visible consumer relief move now" after gasoline prices jumped 50% since the war started.US consumer inflation rose to 3.8% in April, the highest level in nearly three years, while consumer confidence recently fell to a record low during the conflict, the report added.A Reuters/Ipsos poll conducted in May showed over 60% of Americans said rising gasoline prices had negatively affected household finances, while Trump's economic approval rating dropped to 30%.Republican lawmakers are growing concerned that higher fuel costs and economic pressure could damage the party's chances in November's midterm elections.White House officials are also tracking whether national gasoline prices could climb to $5/gal, according to the source, while American Automobile Association data showed prices have already crossed that level in seven US states.The White House did not immediately respond to' request for comment.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)]

Commodities

US-Led LPG Export Recovery Eases Asia Supply Crunch After Hormuz Disruption, Vortexa Says

Global seaborne LPG exports have rebounded toward their five-year average in May after a sharp disruption caused by the Middle East Gulf conflict and closure of the Strait of Hormuz, Vortexa analyst Rohit Rathod said in a Thursday note.Exports recovered to around 4.8 million barrels per day on a 28-day moving average basis, easing pressure on supply-starved Asian buyers. However, global flows remain about 600,000 bpd below the historically high levels seen in February 2026.The recovery has been driven largely by the US, the world's biggest seaborne LPG exporter, with additional support from Algeria, Canada, Malaysia, Sweden, and Argentina.Global LPG imports, which slumped through April in line with falling export volumes, are also expected to recover in the second half of May as cargoes loaded last month arrive mainly in Asian markets.Still, congestion around the Panama Canal threatens to slow the recovery, forcing some vessels traveling from the US Gulf Coast to Asia to reroute around the Cape of Good Hope, extending voyage times.US LPG exports have expanded steadily since 2023 on the back of higher natural gas liquids production and added export capacity, with combined exports nearing 2.8 million bpd in April. Export volumes rose across major terminals, including Enterprise Houston, Energy Transfer Nederland, Targa Galena Park, Phillips 66 Freeport, and Energy Transfer Marcus Hook.The startup of Enterprise's Neches River Terminal near Beaumont, Texas, also boosted exports, as the facility shipped its first cargo in April, ahead of its planned June launch.Rathod said some terminals shifted flex capacity away from ethane exports toward LPG as stronger propane prices widened the Mont Belvieu propane-ethane spread to more than $325 per tonne on May 12.India, heavily reliant on Hormuz-linked supplies, has increasingly turned to US LPG cargoes while boosting domestic production and curbing commercial consumption to narrow supply gaps.India moved to curb commercial LPG consumption in early March while directing refineries to raise output. Domestic LPG production rose about 30% month-on-month and 27% year-on-year in March to roughly 524,000 bpd, according to PPAC data, while consumption fell 13% year-on-year to about 911,000 bpd.The roughly 350,000-400,000 bpd supply gap could narrow after Nayara Energy's 400,000 bpd refinery resumes operations in mid-May following maintenance, adding an estimated 45,000 bpd of LPG supply. The remaining shortfall will need to be met through imports or further demand curbs.