PJM vs ERCOT: The Battle for AI Infrastructure
Which grid is better for datacenters: PJM or ERCOT?
ERCOT is superior for speed-to-market (3-4 years) and raw energy costs ($35-45/MWh). PJM is superior for institutional-grade reliability and low-latency connectivity, though it faces severe queue congestion (2029+ timelines) and record-high capacity prices ($270/MW-day).
Key Data Points
- ERCOT Queue: 3-4 Years (Fastest)
- PJM Queue: 5-7 Years (Severely Backlogged)
- PJM Capacity Price: ~$270/MW-day (800% jump)
- ERCOT Energy Price: ~$35/MWh (Renewable heavy)
- Best for Training: ERCOT (Cost Optimized)
- Best for Inference: PJM (Connectivity Optimized)
Head-to-Head Comparison
| Factor | PJM (Data Center Alley) | ERCOT (Texas) | Winner |
|---|---|---|---|
| Interconnection Queue | Severely Backlogged (2029+) | Congested but Moving (2028) | ERCOT |
| Power Cost (Energy) | $45-55 / MWh | $30-40 / MWh | ERCOT |
| Capacity/Reliability Cost | High ($269/MW-day) | Included in Volatility | ERCOT (Cost-wise) |
| Grid Reliability | High (Capacity Market) | Variable (Energy Only) | PJM |
| Clean Energy | Nuclear, Gas mix | Massive Wind/Solar | ERCOT (Renewables) |
| Network Ecosystem | Unrivaled (Ashburn) | Growing (Dallas) | PJM |
Deep Dive Analysis
The PJM Capacity Shock
PJM's recent capacity auctions saw prices jump 800% to $269.92/MW-day. This adds roughly $10/MWh to the all-in power price for datacenters. This was driven by coal retirements and massive load growth from AI.
The ERCOT Volatility Gamble
ERCOT is an "energy-only" market. Prices are usually low but can spike to $5,000/MWh during scarcity events. Datacenters can turn this into a profit center by participating in demand response (selling power back), but it requires operational flexibility.
Frequently Asked Questions
Why is PJM's queue so slow?
PJM was overwhelmed by speculative solar projects. They instituted a "first-ready, first-served" reform, but are still processing a massive backlog. New large load applications submitted today likely won't energize before 2029.
Does ERCOT connect to other grids?
Minimally. ERCOT is an electrical island, which exempts it from many FERC regulations but means it cannot import power during emergencies. This isolation increases reliability risk.
Where should I build a 50MW training cluster?
If cost and speed are paramount: ERCOT (West Texas or Dallas outskirts). If latency and ecosystem access are paramount: PJM (Ohio or Pennsylvania, avoiding crowded Loudoun County).
Check Site Readiness in Both Grids
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