Virginia Data Centers Push PJM Congestion Costs to $6 Billion in Six Months
PJM congestion costs hit $6 billion in the first half of 2026 as Virginia's data center load strains grid capacity and draws state tax retaliation.
Transmission congestion costs across PJM jumped 43% in the first half of 2026 to $6 billion, with Northern Virginia among the most constrained areas, according to data published Thursday (2026-08-27). The figure puts a dollar value on what grid engineers have been tracking for years: a single region's data center buildout straining transmission infrastructure across a thirteen-state network.5
EIA data show Virginia commercial electricity sales rose by nearly 30 million megawatt-hours between 2019 and 2025, with much of that increase attributed to the state's extraordinary concentration of data facilities. In the Dominion portion of the PJM grid, summer peak demand in 2025 ran 23% above 2019 levels; the 2025-26 winter peak came in 45% higher than six years prior. PJM now projects summer peak demand in that region to grow at 5.4% per year on average over the next decade, driven largely by continued data center development.5,4
That pace of growth helps explain why Virginia's political establishment has started pushing back. Democrats in Richmond closed a months-long budget standoff in late June (2026-06-22) by agreeing to impose a temporary tax on data center power consumption, estimated to cost the industry $600 million a year for two years. The deal preserved nearly $2 billion in annual sales tax exemptions that had been the sticking point in negotiations.1
The Data Center Coalition called the $1.2 billion two-year levy a threat to investment and warned it would raise costs for Virginians. But the political direction was already clear before the tax deal. The Virginia Senate had passed a bill to eliminate a separate $1.6 billion tax break for data center equipment, according to reporting from August (2026-08-07), reflecting how quickly the legislative mood has shifted.1,2
Public polling reinforces that shift. A 2026 Pew Research Center survey found 38% of respondents believed data centers were mostly bad for home energy costs, against just 6% who said mostly good. In Texas, 55% of voters oppose data center construction despite the state pushing ahead with 32 new gas-fired generation projects to serve the load.2
The scale of electricity demand underlying this reaction is significant. According to the Energy Institute's 2026 Statistical Review of World Energy, global data center consumption reached 787.8 TWh in 2025, up from 410.8 TWh in 2020 — a 92% increase in five years, or roughly 14% average annual growth. US facilities consumed 312.6 TWh, equal to 39.7% of the global total, and US data centers alone accounted for about 49% of the entire global increase in 2025. China ranked second at 205.7 TWh.6
Forecasters see no slowdown near term. S&P Global Energy estimates global data center demand could grow 12% to 16% per year between 2025 and 2030, reaching roughly 1,550 TWh by that point, nearly double 2025 levels and comparable to projected total power consumption across all of Latin America. A Department of Energy-supported analysis put US data center consumption at 4.4% of national electricity use in 2023, with a range of 6.7% to 12% plausible by 2028, depending on the pace of AI deployment and efficiency improvements.5
PJM's capacity auction results, announced during the week of July 13 (2026-07-13), added a regional cost dimension: the grid operator said data center load growth was expected to add billions of dollars in electricity costs across 13 states.3
The signal for power markets in the near term: whether Virginia's two-year tax framework, combined with removal of equipment exemptions, slows new data center interconnection requests in the Dominion zone or shifts development to adjacent service territories where transmission constraints are less severe but where the same demand trajectory is already building.1,5