Trump makes a political power play on data centers

• Officials are scrambling to enable quick a buildout of energy-thirsty AI data centers without sticking consumers with even higher bills — especially ones they'll remember at the ballot box.

Driving the news: Trump lieutenants and the governors of Pennsylvania, Ohio, Virginia and elsewhere on Friday urged the nation's largest grid operator — PJM — to hold an auction for tech companies to bid on 15-year contracts for new power generating capacity.

• The joint "principles" that Trump officials and governors of 13 states signed also ask PJM to extend a price cap on the region's power auctions for another two years.
• The agreement urges PJM to require data centers to pay for the new generation built on their behalf, whether or not they use the power.
• The effort will "advance more than $15 billion in new power-generation projects," the Interior Department boasted in a release.

Winners and losers: GE Vernova, which makes turbines for natural gas-fired power plants, is the "clearest winner," Jefferies analysts said in a note. The company's stock price was up nearly 6% Friday.

• It's also positive for power companies including NRG Energy, PPL Corp. and NextEra Energy, the advisory firm said.
• But shares of the biggest independent power producers fell, including Talen Energy and Vistra.

State of play: The bipartisan push signals that the political importance of power prices isn't lost on either party.

• It brings together the White House and governors— including Pennsylvania's Josh Shapiro (D), who's weighing a 2028 presidential campaign and has been a key proponent of capping PJM auction prices.
• "For two years, I've been sounding the alarm about the need for real reform at PJM," Shapiro said in an X post. "Pennsylvanians were paying more and more, and getting nothing in return."

Yes, but: Trump officials on Friday sought to blame Biden-era policies for ongoing price rises that have spanned the administrations to varying degrees.

• "The Biden administration's forceful closures of coal and natural gas plants without reliable replacements left the United States in an energy emergency," Energy Secretary Chris Wright said in a statement alongside the new principles.

The other side: Many Democrats and some analysts argue that White House anti-renewables policies are preventing some of the quickest additions of badly needed power.

• "Clean energy should have the opportunity to sell into this auction as well," said electricity analyst Rob Gramlich, head of Grid Strategies LLC.
• "Some sources like offshore wind and batteries have the same 'capacity value' as gas plants, and no source is fully 24x7x365, so the market should include all resources with the credit they deserve."
• Gramlich also questioned whether Friday's deal would work "or fit into existing electric industry structure and state and federal law and regulations."

Reality check: Pledges to pay for new generation are hardly enough to bring lots of new power and data centers online.

• Developers face permitting hurdles, while a new BlackRock paper warns of worker shortages that could hamper the build out of data centers and upgrading aging infrastructure.

Zoom out: The policy is new, but builds on corporate and regulatory trends around who should foot the bill for expanding grids and new power output. A few examples ...

• Microsoft this week vowed to "pay our way to ensure our data centers don't increase your electricity prices," via asking utilities and regulators to set rates high enough to cover costs, paying for grid improvements and more.
• DOE is pushing the Federal Energy Regulatory Commission to craft sweeping new rules on data center connections that include these big power users funding grid upgrades.
• State regulators in Virginia, home to the country's largest data center cluster, recently approved a new power rate category for large industrial energy users.

Catch up fast: Tech giants have already been striking an array of deals with power companies to help finance new and expanded generation.

What we're watching: PJM later Friday unveiled a series of steps its board developed to integrate data centers and other large electricity-load additions to the grid.

• Those steps included "significant load-forecasting improvements and [an] increased role for states" as well as finding ways for new large power users to bring their own new generation or enter into a connect-and-manage framework.

Maria Curi contributed reporting.

Editor's note: This story has been updated with details on PJM's plans.