The amount of stress to the electric grid posed by data centers is so uncertain it could hamper New Jersey’s effort to plan and execute new electricity generation and grid upgrades, speakers at a clean energy conference said. 

Preparing for an unknown amount of data center demand means some tough decisions on where to invest, speakers said at the Clean and Sustainable Energy Summit 2025. Some decisions could mean a pragmatic departure from the state’s 100% clean energy commitment. 

“How do you right size the solution when you can’t quantify the problem?” asked panel moderator Marian Abdou, commissioner for the New Jersey Board of Public Utilities (BPU). The event was held May 14 at Montclair State University. 

The state’s draft Energy Master Plan released in March says data centers will increase electricity demand by more than 65% by 2050. PJM predicts the 2023/24 demand of 134,000 MW in the 13 states it serves will grow to 160,000 MW by 2034, a 20% increase, Stu Widom, senior manager of regulatory/legislative affairs for the RTO, said at the conference. (See NJ Releases Electrification-focused Energy Master Plan.) 

Also driving demand is greater electric vehicle use, building electrification and the growth in manufacturing due to reshoring, Widom said. The stress on the grid is further compounded because old, fossil-fueled facilities are closing at a faster rate than replacement sources— mainly clean energy — come online, he said. 

Matching supply with demand will require a dramatic expansion in generation capacity and a major upgrade in the state and regional grid, conference speakers said. 

But the expected future load from data centers is key, Widom said. At present, they account for about 4% of PJM’s load. The RTO forecasts data centers will account for 12% in 2030 and 16% in 2039, he said. 

Overstated or on Target?

“We know the data center surge is real. I think that’s unquestionable,” Abdou said. She asked panelists for insights into how big the demand surge would be. 

Michael Palmer, director of business development at FuelCell Energy, a clean technology and manufacturing company, said that given the high cost of electricity in New Jersey, “we don’t believe the number’s going to be that high. 

“What I hear from a lot of developers, they’re looking for low-cost power, period. So they can locate out in the middle of Nevada, down in the Southeast, where it’s cheap power. Virginia is a hot lead right now. Why? Because, well, it’s a lot of coal-based power down there, to be honest, and it’s cheap power.  

“For New Jersey to attract those businesses, something needs to change.” 

He dismissed the suggestion the state would attract “hyper-scale, huge facilities” requiring 500 MW of power, saying those are uncommon. Instead, the state might see smaller, 300,000-square-foot facilities requiring 35 to 50 MW of power.  

But Steve Goldenberg, chairman of the energy, climate change and public utilities practice at Giordano, Halleran and Ciesla, a New Jersey law firm, said there already are 70 data centers in the state and “the interest in New Jersey is sincere.” 

“They’re aware of all the warts,” he said, but data center developers and entrepreneurs are attracted to the state by the intensity of demand that drew offshore wind companies. 

 “Look where New Jersey is, vis a vis all the load that’s on the East Coast,” he said. “We’re in the mix.” 

Avoiding Redundancy

Verifying to what extent that is true, and how much load New Jersey-based data centers will require, is critical to the state’s decision making, said Paul Youchak, deputy attorney general. 

PSEG, which serves North Jersey, says it’s received interest from data centers totaling 4.5 GW of capacity. Atlantic City Electric, in South Jersey, has reported 3.5 GW of interest, Youchak said. But “some of that may be double counting. Some of that may be speculative,” and the state and region need rigorous evaluation standards to determine actual load, he said. 

“We don’t want to be in a world where we build twice the amount of transmission that we need,” he said. “We don’t want to be in a world where we have built a nuclear power plant” that doesn’t sell much energy and is a burden on ratepayers, he added. 

One solution is for data centers to accept “load flexibility,” he said. Solar and storage projects can be developed relatively quickly to help a data center’s immediate needs. But a nuclear power plant, which can meet much of a data center’s power need, would take much longer to build, potentially coming online years after a data center starts operating. 

Flexibility means in the short term, a data center would “accept curtailable load,” so that when the state faces peak demand, the center would reduce the amount of energy it draws, he said. 

Isolating Data Centers

Some legislators have suggested requiring data centers looking to move into the state to “Bring Your Own Generation.” In a similar vein, Palmer suggested ratepayers could be insulated from the heavy infrastructure investments for data centers by having them operate their own behind-the-meter generator or a microgrid. 

“Give them some way of doing that on their own, without having to rely on the grid,” he said.   

But Youchak said that likely wouldn’t help the state much. 

“We live in a regional grid,” he said. It doesn’t mean much “if New Jersey has a Bring Your Own Generation requirement if Maryland, Virginia, Pennsylvania don’t. Their load burden is going to affect how we deal with prices for electricity in the state of New Jersey.” 

Making a keynote speech later, state Sen. Andrew Zwicker (D) rejected the suggestion that perhaps the state should stop pursuing data centers and leave them to other states.  

“It won’t alleviate the problem,” he said. Data centers account for 5% of the state load and are predicted to account for only 10% in the future. “The problem of supply, demand, energy prices going up rapidly is already there.” 

Protecting Ratepayers

PJM and BPU officials say demand outpacing supply already has had an impact. The $270/MW-day price of electricity in the PJM capacity auction in July 2024 was about nine times higher than the previous auction. That helped shape the New Jersey Basic Generation Services auction in February 2025, setting prices that will take effect June 1 with a 20% increase in the electricity bill of the average ratepayer. 

In a panel called “Seeking Positive Ratepayer Outcomes,” Fred DeSanti, executive director of the New Jersey Solar Coalition, warned the audience that the “people of New Jersey have no understanding” of the magnitude of the task the state is facing and that it will cost tens or hundreds of billions of dollars in the long term to fix. 

“I am not a climate change denier. I am a climate change realist,” he said. “I think we’re in the right path on a lot of this stuff, but we have not had the conversation with the people of New Jersey. We’re going to have to pay.” 

He offered three changes in the state’s approach to clean energy that would help. 

He said the state needs to eliminate the renewable portfolio requirement that 35% of the state’s electricity in 2025 come from Class 1 sources with a renewable energy certificate. Because the state has no wind power, the requirement means the state spends $800 million in buying clean Class 1 energy out of state, he said. That purchase supports out-of-state projects and provides no benefit to improving New Jersey’s infrastructure, he said. 

DeSanti also suggested the state should withdraw from the Regional Greenhouse Gas Initiative (RGGI) because it no longer is effective, and “leakage” from the system means New Jersey pays about $580 million in “tax,” much of which “goes to pay premiums to Pennsylvania coal generation.”  

Under the RGGI system, which includes New Jersey and 10 other states, the coalition sets a steadily declining regional cap on carbon dioxide emissions. Certain plants that exceed the cap must pay for a “RGGI CO₂ allowance” for every short ton of CO₂ emitted. New Jersey gas plants are more efficient than those in non-RGGI states, such as Pennsylvania. But because Jersey plants are controlled by the RGGI rules, power from non-RGGI states is cheaper and is imported into New Jersey, he said.  

“RGGI worked for us well,” and has made New Jersey plants cleaner, he said, but it has “hit a point of inflection. … It doesn’t work anymore.” 

He also encouraged the state to reevaluate its energy efficiency programs, saying the easy work had been done and the efficiency improvements now were expensive for much less savings.