By MarylandReporter.com/Capital News Service, a student-powered news organization run by the University of Maryland Philip Merrill College of Journalism
Maryland's jurisdictions are tackling the corporate demand for more data centers, while local residents are pushing against them and the state has no overall governance policy. Image of an AI generated data center. Image by kp yamu Jayanath from Pixabay
BY OLIVIA BORGULA | Capital News Service
A few blocks away from Lexington Market in Baltimore, inside a six-story building adorned with intricate detailing, there’s a data center that uses enough electricity to power a city roughly the size of Dundalk, Maryland.
The company that runs the over 150,000-square-foot facility announced in 2024 it would triple the data center’s capacity over the next few years to meet the needs of the booming artificial intelligence industry.
That’s just one of the dozens of data centers in Maryland that surround the Washington metropolitan area and Baltimore. Opponents say these facilities put more pressure on the state’s already fragile energy grid and contribute to rising electricity costs.
Maryland ranks 13th in the U.S. for its residential electricity prices as of October 2025, according to the U.S. Energy Information Administration. Between October 2024 and October 2025, average residential electricity prices in the state rose by about 18%.
That could just be the start. A 2024 U.S. Department of Energy report estimated data centers will consume about 7% to 12% of the country’s electricity by 2028, up from 4.4% in 2023. Data centers’ proportion of the regional electricity grid supplying power to Maryland and other nearby states will triple between 2024 and 2029, according to a report by the grid operator.
As a result, the regional electricity grid estimated in another report that its peak energy load is estimated to grow 32 gigawatts from 2024 to 2030 — enough energy to power at least an estimated 24 million homes.
A sudden surge in power demand, supply issues and a long, bureaucratic approval process for bringing on new power has led to higher electricity prices in Maryland — costs that are only expected to increase.
“This isn’t a community hospital or a school or even a highway that everybody might use,” said Steve Black, president of Frederick County’s Sugarloaf Alliance, one of six local organizations that make up the Maryland Data Centers Analysis Group. “These facilities, these data centers exist to make money for a private company, and we are all paying for their capital need.”
Maryland’s Grid Operator
One reason for the rising cost of electricity in Maryland is the pressure data centers are putting on PJM Interconnection LLC, a regional organization that coordinates the movement of wholesale electricity across 13 states between Illinois and New Jersey, along with Washington, D.C. It’s run by 10 board members who aren’t allowed to have a financial stake in any company that participates in PJM’s market.
One part of ratepayers’ bill is the “supply” section, which is driven by PJM’s annual auction. Power companies and businesses submit bids based on how much energy they can offer and how much it costs them to keep that power reliable during high demand. This is called the total capacity cost.
“What they’re doing is trying to guarantee that on the worst days of the year, during the worst hours of the worst days, there are no brownouts and blackouts,” said Michael Powell, an attorney with the Energy and Environmental Practice Group at Gordon Feinblatt LLC.
In PJM’s 2024 auction, which started affecting customers in June, capacity costs jumped from about $2 billion to nearly $15 billion for the upcoming year. The most recent auction to determine the cost for 2026-27 hit another record high at just over $16 billion, which would have been higher if not for a cap requested by Pennsylvania Gov. Josh Shapiro and backed by Maryland Gov. Wes Moore.
An analysis from the Independent Market Monitor found the capacity hikes stemmed almost entirely from existing and projected data center loads on PJM’s grid. Experts said that is no surprise.
“If the data centers don’t foot the bill, and they come on and the grid has to pay … the ratepayers are going to carry the cost,” said Andrew Chien, a University of Chicago professor who studies sustainable computing.
Boosting Supply
One way to manage the increased data center demand is to add power sources. But PJM hasn’t increased power capacity relative to peak demand as much as other operators around the country.
The time it takes PJM to bring new generation online has risen from less than two years in 2008 to more than eight years today.
Time-consuming studies are required before new power projects come online. Because of a jump in interconnection requests, PJM has had to work through a backlog of queued projects. PJM plans to start reviewing applications that came in since 2022 starting this year.
A group of bipartisan lawmakers from multiple states including Maryland pressed PJM in November to impose more regulations to shield consumers from rising costs.
In January, PJM’s board delivered updated recommendations to address load challenges caused by data centers, including allowing the facilities to connect to the grid more quickly if they can bring their own generation.
Alison Williams, vice president of energy policy and research at b Strategic Solutions and representative for the advocacy group Power for Tomorrow, said if there aren’t reform efforts, the PJM system could, in a worst-case scenario, suffer blackouts and brownouts along with price increases.
“We know that demand is going to keep going up,” Williams said. “The piece that we do not know is how PJM is going to solve their supply problem. And so if there is a time to have answers, it’s right now.”
Rising Electricity Costs
Another component to electricity bills are rates set by local utility companies — such as Baltimore Gas and Electric, Delmarva Power and Potomac Electric Power Company — based on the cost of delivering that power, maintaining local infrastructure and repairing systems. The Maryland Public Service Commission regulates those rates, which were rising before the AI-driven data center expansion.
In the last 10 to 15 years, Maryland utility rates have steadily risen, according to a report from the state’s Office of People’s Counsel, an organization that works on behalf of Maryland’s residential customers to advocate for utility performance.
This stems from a variety of factors, including warmer temperatures, increased costs for energy delivery — some of which have more than doubled since 2012 — and programs that allow utilities to recoup those costs more quickly, according to the Office of People’s Counsel.
Black, of the Maryland Data Centers Analysis Group, said while Maryland rates have increased, they’re now expected to skyrocket because of the data center demand.
“It’s going to start spiking in ways that nobody, no policymaker has a good way of getting their hands around,” he said.
Strain on Maryland’s Grid
Amid the rising prices, there’s also concern about whether Maryland is getting the electricity it needs.
For example, about 4,000 BGE customers in Howard County had their electric service cut off for 30 minutes in August after an infrastructure issue forced Maryland generation plants offline.
Activists warn these kinds of events could become more common if the power demand from data centers overwhelms the state’s electricity grid. Maryland is in a particularly tricky spot because it doesn’t have enough energy infrastructure to meet rising energy needs, according to PJM.
Since 2018, Maryland has retired 6,000 megawatts of power production — 75 times the amount of the Baltimore data center — and only added 1,600 megawatts of power. The state relies on other states for 40% of its annual electricity needs, according to a PJM report.
Now, though, heightened energy demand is forcing fossil fuel facilities to stay in power past their set retirement dates. Two Talen Energy-operated power plants located near Baltimore were set to retire at the end of May 2025, but will now run until 2029 to avoid overburdening the grid.
In an August 2024 report, the Office of People’s Counsel found consumers will have to pay $629 million to keep these fossil fuel plants in operation. These costs will be incurred until Chicago-based Exelon — owner of BGE, Delmarva and Pepco — completes transmission projects that will make up for the power that will be lost when those plants shut down.
“It’s really the overall shortage between supply and demand that’s causing the delay of [closing] those power plants,” said University of Maryland Professor Yueming “Lucy” Qiu, who studies energy and environmental economics. “Most of these fossil fuel power plants, they can generate relatively stable electricity compared to renewable energy, which electricity is usually intermittent and not very reliable.”
Another project, called the Maryland Piedmont Reliability Project, is designed to prevent strain on Maryland’s power grid by making it easier to bring in electricity from outside the state.
The $424 million project, led by a New Jersey–based investor-owned utility, would build new transmission lines that allow Maryland to import more power from the broader PJM regional grid.
The current methodology for charging customers for new transmission projects causes jurisdictions closest to the load increase to pay a larger portion of the costs, even if those customers are located in a different state.
For example, the expansion of data centers in Northern Virginia could cause Maryland consumers to pay for transmission projects to meet the increased demand these facilities create, according to the Office of People’s Counsel.
New fossil fuel resources are frowned upon because of Maryland’s push toward renewable energy, said Black, of the Sugarloaf Alliance. Nuclear power plants tend to be built in areas of low population density to account for a possible evacuation, so potential sites are hard to find in a smaller state like Maryland. It’s also a challenge to find places in the state with the limitless water supply necessary to cool the plants, Black added.
Angie McCarthy, a conservation advocate with Nature Forward, said as a result, it’s not possible to make large amounts of power available for data centers.
“If we build a data center that requires one gigawatt of energy, we are expected to be able to provide that energy within a development cycle of a couple of years,” she said. “That is just unreasonable in our current landscape.”
Future Expansion
There are dozens of data centers in Maryland, according to an industry-created data set, and plans to develop more. Data center backers say they are necessary.
There’s a proposal in Prince George’s County to redevelop an abandoned mall into 4 million square feet of data centers. A $1.2 billion development in Frederick, which will create the largest data center campus in the state, is already underway.
Advocates frame data centers as a growth opportunity for Maryland’s tech sector and a potential source of high-paying jobs and local tax revenue, especially as the state grapples with a multibillion-dollar budget deficit.
Kelly Schulz, CEO of the Maryland Tech Council, said the Frederick County project will generate $40 million in annual tax revenue. That’s the equivalent of more than 700 entry-level teacher salaries.
“I’m really comfortable about the benefits financially that this has to the county as far as tax revenues, and that’s not even to mention the number of jobs that will come into Frederick County because of this development underway,” she said.
Michael McHale, business manager at the International Brotherhood of Electrical Workers Local 24 headquartered in Baltimore, said data centers create jobs, especially because many are large facilities that take years to complete. Every 275 square feet of data center supports one construction job, according to the tech council’s report, which provides a boost for a sector that has lost 13,000 jobs since 2019.
“This [Frederick] facility will probably take 10 years to build out. So in theory, at first they could start there and work there for a large part of their career,” he said.
Critics of the facilities still worry, however. Chris Miller, president of the Virginia-based Piedmont Environmental Council, said there’s a lack of accountability and data about the long-term impacts of data centers, which makes data center development hard for governments to regulate.
Miller added Maryland is experiencing some of the same pressures that transformed Northern Virginia into the world’s largest data center hub.
“Data center companies ought to be covering the direct costs in the indirect costs, including mitigation of environmental and community impact, and then distributing those costs on a truly global market. That would be fair, that would be equitable,” he said. “Utility bills are … going up a lot to subsidize the 10 richest companies in the world.”
