Goldman Sachs wrote a note to investors on wholesale, bulk purchase electricity prices having shot up in the Mid-Atlantic area—that is, for the territory of the regional transmission operator called the PJM Connector—to four times, in one case seven times their previous level. Although the wholesale prices have been much higher than recent levels once before, in 2011, they were then only about half of the prices quoted on July 28 and July 29 of this year.
These rates are called “capacity prices,” charged to utilities by the regional transmission operator (RTO), and they are future-power prices a year ahead (June 1, 2025 to May 31, 2026). Therefore they reflect the very high cost of anticipated new distribution lines for transmission of power from other regions, into the Mid-Atlantic states—without which, the region’s utilities will not be able to meet power demand at all. And that demand, across the PJM Connector’s Mid-Atlantic territory, is coming from the proliferation of super-power-hungry data centers required by the large tech companies for their artificial intelligence programs and products. AI products are made by “scraping the Internet” of huge volumes of random content of all kinds, and storing the vast amounts of “information” obtained—many argue, in blatant violation of intellectual property rights of all kinds—for use in “very large language models” and other huge data collections, to make robots talk as if they “thought” or “knew,” etc. The more tech competitors develop the more such “AI models,” the more data centers must be built, and the more hundreds of megawatts of power are needed.
ZeroHedge quotes the Goldman Sachs report: “The price across the RTO … was $269.92/MW-day. This is more than an 800% increase from the most recent auction, and also a new record…. The auction failed to procure the required level of capacity in two zones (Dominion … and Baltimore Gas and Electric or ‘BGE’) which cleared at the applicable caps of $444.26/MW-day (DOM) and $466.35/MW-day (BGE).” These future prices are close to $20/MWhr, and this is one step removed even from actual wholesale power prices to the utilities—two steps removed from retail prices to businesses or households.
