• THE GRID
September Killed the Off-Season
$4,300 per megawatt-hour. That was the spot price on PJM's Western Hub last Wednesday evening. Not in July. Not in August. In September.
Power grids serving more than 67 million people just got walloped by a heat wave that had no business showing up this late in the year. Temps ran 20°F above normal across the Midwest and South. St. Louis hit 99°F — 18 degrees higher than usual for mid-September.
But the heat wasn't the real problem.
The real problem was timing. September is when grid operators take plants offline for repairs. After a brutal summer, aging generators need the work. PJM had over 35,000 MW of planned outages already underway. For context, planned outages peaked at just 19,000 MW during the hottest week in July.
PJM Forecast Peak
133,355 MW
| Planned Outages
35,000+ MW
|
MISO Outages
51,000 MW
| Spot Price Spike
$4,300/MWh
|
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So PJM issued a Maximum Generation Alert. It called on demand response customers across its footprint. It asked DOE to waive emissions rules so plants could run flat out. Next door, MISO had 51 gigawatts offline against a forecast 105.2 gigawatts of demand on Thursday.
"PJM's generation fleet is starting to show signs of its age when trying to stay working."
Cunningham nailed it. These plants got hammered all summer. Federal orders kept them running at full blast through repeated heat waves. Now they need fixes — and the weather won't let them rest.
This is the new reality. The EIA's September outlook projects record U.S. electricity sales of 4,135 billion kilowatt-hours in 2026. PJM alone accounts for nearly 45% of the country's generation growth. Gartner says global data center power demand will hit 132 gigawatts this year, up 27% from 2025.
The grid used to have an off-season. Mild spring, mild fall. Time to fix things. That window is closing fast.
AI load is coming. Data center demand keeps climbing. And the fleet that has to carry all of it can't get a break.
The grid's biggest risk isn't a shortage of power plants. It's a shortage of weeks to fix the ones we have.
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• RESISTANCE
Texas Comes for the Water
On September 1, the chairman of the Texas Senate's Water, Agriculture, and Rural Affairs Committee said something that should make every data center developer pause. Senator Charles Perry told the room that no developer "has any business" using evaporative cooling in a state with such fragile water sources.
That's not a suggestion. That's a signal.
The committee signaled intent to: prohibit evaporative cooling for data centers, require monthly water-use reporting and source disclosures, mandate drought contingency plans, and repeal the state's data center sales tax exemption. Chairman Perry called non-cooperating developers "bad actors."
The numbers behind the hearing are striking. A HARC study found Texas data centers already consume an estimated 25 billion gallons of water per year. By 2030, that could reach 29 to 161 billion gallons — up to 2.7% of the state's total supply.
Most new data centers use air cooling or closed-loop systems. But the older evaporative method drinks water fast, especially in Texas heat. And nobody has been tracking exact volumes. The committee wants monthly reports now, not annual ones.
The sales tax exemption is the real leverage. Texas has been one of the most generous states for data center incentives. Pulling that exemption would change the math on dozens of planned projects.
Perry's message was blunt. Companies that refuse to share data with state and local officials should expect the same treatment from lawmakers.
Texas welcomed data centers with open arms. Now it's asking what they're drinking — and how much.
• BLACKOUT WATCH
Three Risks Nobody's Pricing
Europe's gas tank is near empty. EU gas storage sits at just 69% full — the lowest level for this time of year in nearly two decades. The Iran war crushed Qatari LNG supply. Europe now sources roughly two-thirds of its LNG from the U.S. If Europe keeps bidding up American cargoes this winter, Henry Hub prices rise. And every new U.S. data center running on gas gets more expensive to operate.
The maintenance window is gone. PJM just proved it. A September heat wave forced emergency alerts with 35 gigawatts of plants down for routine repairs. The EIA projects record demand in 2026. Data centers add load year-round. Old plants that ran all summer now need work — but there's no safe week to do it. NERC's long-term assessment already warned that demand forecasts are outpacing resource additions. The margin for error keeps shrinking.
Climate risk is baked into the concrete. A First Street study found 79% of global data center capacity faces elevated risk from flooding, extreme winds, and wildfires. These buildings are built to last 20 to 30 years. Investors pricing them on five-year cash flows are ignoring what three decades of worsening weather means for insurance costs, downtime, and stranded assets.
The market is pricing data centers as if the weather, the fuel, and the grid will all cooperate for decades. Last week showed they won't cooperate for a single September.
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