“PJM is about to sign a bunch of lucrative 15-year contracts. And they said any DER that wants to participate has to have by Sept. 30 a full 15-year contract that lists every site that's going to participate,” he said. “That's just infeasible for many of these smaller resources.”

The plan seems designed for traditional power plants, he added. Microgrids and smaller resources, including distributed residential storage, will likely not be able to participate, Rutigliano said.

Jeff Shields, senior manager, external communications at PJM disputed this argument.

“Our procurement processes, including the reliability backstop procurement, are fuel-type and technology neutral. We do not favor one resource over another.”

Al-Thaddeus Avestruz, founder and CEO of Volt Harbor, a battery energy storage startup spun out of the University of Michigan, said that the plan is neutral only on paper.

The provisions of the auction and PJM’s clogged interconnection queue mean that the resources that can realistically meet the 2027 deadline are those that are easiest to permit, finance and interconnect quickly--new gas plants, Avestruz said.

Why PJM’s plan won’t lower costs for customers

The PJM plan will boost reliability, but not lower costs, Rutigliano said

He argued that state-backed incentives for DERS should be included in the procurement process because they lower costs. For example, Maryland

offers incentives through its Megawatts for Maryland program and also its residential and commercial energy storage program. In addition, states sometimes issue solicitations for utility credits or other support for storage.

“If a developer or even better a utility, shows up and says, ‘Hey, you know, our state has said we have to deliver 10 MW of distributed storage

by 2030, we'd like to offer it to this auction,’ PJM should accept that without them having to list every single customer who's going to be participating in the program,” he said.

Adding storage to existing power plants is one of the fastest ways to add new capacity to the system, but PJM won’t consider that option in its plan. And it disregards the savings from building new storage near data centers instead of fossil plants hundreds of miles away,  he said. This could lead to overspending on fossil fuels when less expensive and cleaner options are available.

“If you're building these giant loads all concentrated in one place, it makes sense to have incentives to build the things that supply them nearby,” he said.

Greg Field, owner at PGT Energy Solutions, an Arizona-based home battery provider, agreed that local energy makes more sense.

“PJM is essentially making technology companies build a bridge to fossil fuels that could take 30 years to replace,” Field said. “Had PJM allowed microgrids and fast-tracked storage, clean energy could have beaten fossil fuels on both price and speed.”

PJM’s interconnection queue is a challenge

PJM's queue holds roughly 220 GW, including about 67 GW of storage, said Michael Daschle, energy procurement lead at Rowan Digital Infrastructure, which provides hyperscale capacity.

“This backstop auction procures capacity for the 2028-2029 delivery year, but it doesn't fix the queue. If policymakers want clean resources at the front of the line, that's the lever,” he said.

Ultimately, PJM won’t deploy only fossil fuels because they’re polluting and expensive, said Rinaldo Brutoco, founder of the environmental think tank World Business Academy.

“First, there will be a revision to a more balanced environmental approach at the federal level within the next few years. One could argue it will happen as soon as 2028,” he said. Fossil fuels will be very expensive at that point, and he expects that states will require fossil-fuel-operated data centers to deal with their own emissions –at high prices.

“Hopefully, pointing out this hidden future cost to data center operators will encourage them to utilize clean distributed energy resources from the outset,” Brutoco said. Renewable energy is now more affordable than conventional fossil fuels, he added.

Deploying resources for data centers without increasing bills

In the meantime, PJM faces shortages and its prices have skyrocketed, Rutigliano said. PJM needs to find a way to get supply online for data centers that have already been built without increasing customers’ bills even more.

“But from the time prices go up until the time a new power plant can bring them back down is 7 years at best in PJM,” he added.

This creates a huge opportunity for microgrids that include storage.

“Microgrids can move faster than that. There is very high-priced, low-hanging fruit for them to grab,” he said. NRDC is counting on states to enforce air quality and generator permitting rules so data centers don’t rely on fossil fuels that undermine people’s health.

And that will be the opening for microgrids.