PJM shifts to bilateral data‑center deals

PJM Interconnection has settled on a data-center supply plan that relies less on a central market fix and more on direct contracting between large loads and power suppliers. The approach is embedded in PJM’s Reliability Backstop Procurement, a one-time effort aimed at securing new supply for hyperscale data centers and other large customers as electricity demand rises across the grid operator’s 13-state territory and Washington, D.C. PJM has told federal regulators that bilateral contracts and self-supply arrangements should count first, with any remaining gap filled through a backstop procurement. PSEG said this week it has already submitted proposals into that bilateral process. ### Why is PJM steering data centers toward bilateral deals? PJM’s June 30 proposal said the backstop plan is meant to get net-new supply online, allocate wholesale costs to the load buying the capacity, and leave states to determine how retail costs should be assigned. In an April presentation, PJM said the contracts would be direct between load entities or data centers and supply resources, with PJM not serving as a counterparty and not setting the contract terms. (canarymedia.com) Canary Media reported on August 5 that PJM’s plan would require states and utilities to make data centers responsible for buying their own power or risk losing grid service. PJM’s own materials describe Charles River Associates and PJM as confidential intermediaries for matchmaking, while allowing parties to strike deals outside that process on their own. (pjm.com) ### What exactly has PSEG done? PSEG Chief Executive Ralph LaRossa said on the company’s earnings call that PSEG had submitted proposals through PJM’s bilateral contracting process to supply data centers, according to Utility Dive. The company’s generation fleet includes nuclear plants in New Jersey and Pennsylvania that executives have previously said could serve large-load customers. (canarymedia.com) Utility Dive reported that PSEG’s participation comes as PJM tests whether utilities and merchant generators can line up contract-backed supply for hyperscale loads before the grid operator buys capacity itself. LaRossa also said PSEG was encouraged by potential changes to New Jersey’s utility business model, according to the same report. (utilitydive.com) ### How big is the backstop plan behind this? PJM proposed in April a two-phase backstop procurement for 14.9 gigawatts of new resources to serve data centers and other large loads. Reuters reported last week that PJM’s filing said large-load demand could grow by 70 gigawatts by 2038. PJM said in a recent board update that the amount ultimately bought in the backstop procurement will be reduced by any generation secured through bilateral contracts and self-supply arrangements. (utilitydive.com) That sequencing makes the bilateral track more than a side process: it directly affects how much capacity PJM later seeks through its centralized mechanism. (utilitydive.com) ### What does this change for states and utilities? States now have a larger role because PJM’s proposal explicitly leaves retail cost allocation to state-level decisions. Canary Media reported that the plan “make[s] the states figure it out,” while PJM said the structure is intended to let states appropriately allocate retail costs after wholesale costs are assigned to the load purchasing capacity. (insidelines.pjm.com) That setup favors projects that can support long-term, utility-grade contracts. PJM’s request for proposals said the bilateral process is designed to facilitate transactions between supply and load participants and enable efficient development of generation and large-load interconnections. ### When do the next decisions arrive? (canarymedia.com) PJM’s bilateral request for proposals was issued on June 9, with responses due July 21 at 12 p.m. Eastern, according to the RFP document. PJM said in a recent filing that it aims to commence the Reliability Backstop Procurement on September 30, 2026. PJM’s board said last week that bilateral and self-supply deals will be counted first to avoid over-procurement. (pjm.com) That means the next concrete milestones are the matching and contracting work now underway and the September 30 launch date PJM proposed for the backstop procurement. (insidelines.pjm.com)