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October 13, 2026 - The slow buildout of U.S. transmission and surging demand from new data centers continues to hike congestion levels across the country. Congestion costs in the large PJM network jumped in the first half of 2026 due to increasing overload on high-voltage transmission lines, the grid operator’s independent market monitor said in August. PJM operates the electricity grid across all or parts of 13 states and the District of Columbia, stretching from Illinois in the Midwest to New Jersey and the Mid-Atlantic coast.
In February 2026, PJM recommended a further $12.2 billion of transmission improvements, although these were primarily designed to address reliability concerns rather than congestion costs specifically. The grid operator has also rolled out a range of measures aimed at accelerating the connection of large loads and new power generation.
Greater regional and interregional transmission capacity could help PJM tackle soaring demand and rising capacity market costs, while reducing the amount of new generation required.
Data centers and other large loads are competing for limited grid capacity in PJM and raising the value of new transmission capacity. PJM’s network includes "Data Center Alley" in northern Virginia and the network operator has projected 30 GW of additional data center demand by 2030.
Greater grid capacity allows lower cost electricity to be moved to where it is most needed, reducing the need to build more expensive generation closer to demand centers as power consumption grows, according to a recent report by CERA Consulting, part of S&P Global Energy.
The report modelled increased regional and interregional transfer capacity across PJM and three other regions and was supported by the Electricity Customer Alliance and utility company National Grid.
Researchers found that PJM customers could receive $2.30 in benefits for every dollar invested in new transmission infrastructure within the PJM network and connecting to neighbouring networks, Will Brunelle, Media & PR Manager for National Grid Ventures, told Reuters Events. Total benefits through 2050 were estimated at $8.9 billion.
"One of the clearest findings from the study is that better interregional connectivity unlocks some of the largest customer benefits by reducing congestion and giving consumers access to lower cost power sources across a broader area," Brunelle said. "The study also found benefits from avoiding more costly local infrastructure investments and improving reliability."
However, long-distance transmission development in the U.S. is being held back by a lack of coordination between stakeholders and in many cases local public opposition, preventing power generation developers from meeting rising demand.
Research by the Natural Resources Defense Council (NRDC) found that 37.7 GW of new PJM generation had been blocked or delayed by the need for transmission expansions or upgrades.
“Building more regional and interregional transmission in PJM would help to reduce timelines for new power projects to join the grid,” Claire Wayner, Senior Associate of the Electricity Program at Rocky Mountain Institute, said.
Grid bills
Cost allocation is a contentious issue given soaring demand from data centers.
“In general, costs associated with regional projects are allocated to the beneficiaries of the project, with their share roughly commensurate with their benefit,” Jeff Shields, PJM Senior Manager, External Communications, told Reuters Events.
However, attributing costs to specific consumers like hyperscalers can be difficult as many sectors are seeing demand rise, Harrison Fell, Professor of Agricultural and Resource Economics at North Carolina State University, said.
Utilities seeking data center investment may want to offer attractive electricity rates to developers that could result in more costs being distributed among other customers, Fell noted.
Tom Rutigliano, Senior Advocate, Climate & Energy at the Natural Resources Defense Council (NRDC), highlighted the projected benefits of planned transmission work in the Midcontinent Independent System Operator (MISO) network. MISO estimates its projects in its latest long range transition plan will cost consumers about $5 per 1,000 kWh per month while the wider benefits would be $10 to $18, including avoided generation costs, improved reliability and lower production costs.
Increased transmission capacity can be particularly valuable during extreme weather.
During Winter Storm Elliott in December 2022, an additional gigawatt of transfer capacity between PJM and MISO could have cut wholesale electricity costs by about $27 million over the five-day storm by allowing more power to flow from the lower-priced to the higher-priced region, according to a 2023 Grid Strategies/ACORE analysis.
Siting issues
New transmission lines require substantial land and may cross multiple jurisdictions, requiring multiple approvals and inviting potential opposition from local communities. For example, the proposed $424 million 500 kV Maryland Piedmont Reliability Project spanning 67 miles has been opposed by local authorities and landowners due to its impact on private and agricultural land. Disputes over access for route surveys reached the federal courts.
Large regional and interregional projects require coordination between PJM and neighbouring grid operators, transmission developers, Federal Energy Regulatory Commission (FERC), state regulators, local governments and landowners. PJM approved the $268 million Independence Energy Connection between Pennsylvania and Maryland in 2016, but conflicting state regulatory decisions and subsequent litigation meant the 230 kV project was still navigating approvals a decade later.
Under the Trump administration, the Department of Energy (DOE) has adapted its plans for transmission investments alongside cuts to clean energy support programs.
For example, energy secretary Chris Wright in August announced the cancellation of three projects proposed in the Biden administration's 2024 National Interest Electric Transmission Corridor (NIETC) planning process, including the Southwestern Grid Connector Corridor that was designed to facilitate East-West interregional interconnections.
The Trump administration is seeking to address transmission constraints alongside measures to preserve generation, improve resource adequacy and accelerate firm and dispatchable capacity, a DOE spokesperson told Reuters Events.
Greater interregional planning between networks would provide significant value.
“To date, PJM has not done comprehensive interregional planning with any of its neighbors, in part because it is not required to by FERC or Congress,” Fell said.
"Ideally, they'd leverage the FERC Order 1920 [multivalue long-term] planning framework for interregional and then also short-term planning on top of that to address any remaining interregional needs on a 5 to 10 year outlook," he said.
"Specific interregional projects could be developed either in joint planning processes, like those done annually by PJM and MISO in their Joint Operating Agreement, or through merchant development of interregional lines, such as the SOO Green or Grain Belt Express HVDC projects that propose to connect PJM to neighboring regions,” Zach Zimmerman, Director of Research and Policy at Grid Strategies, said.
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