With the help of a federal grant, Pennsylvania will explore new ways to strengthen its power grid ahead of a projected surge in electricity demand.

The funding comes as power grid planners warn that power plants are retiring faster than new generation is coming online, fueling concerns about whether the grid can keep pace with growing demand – particularly from AI-driven data centers.

The Pennsylvania Public Utility Commission, or PUC, recently announced it received a $2 million grant from the U.S. Department of Energy to study cost-effective ways to expand the grid.

According to the PUC, the Pennsylvania Accelerated Transmission and Energy Redevelopment, or PATER Study, brings together state agencies and industry partners to make sure the findings become tangible.

The study is designed to modernize the state’s transmission infrastructure and accelerate redevelopment at former power plant sites and other key locations across Pennsylvania. Supporters hope doing so will attract economic investors.

The first phase is expected to be completed by mid-year. The second phase – a deeper assessment of prioritized power generation facilities – is anticipated to be completed by the end of 2026.

Team Pennsylvania will take the lead in a partnership with the PUC, Gov. Josh Shapiro’s Office of Public Policy, the Department of Community and Economic Development, the Department of Environmental Protection’s Energy Programs Office, and the Office of Consumer Advocate.

“Reliable and affordable electricity is foundational to Pennsylvania’s economic competitiveness,” said PUC Chairman Steve DeFrank. “As new industries expand and electricity demand increases, we must identify practical ways to bring power online more efficiently. This study will help us better understand where strategic transmission upgrades and redevelopment of retired generation sites can accelerate investment, support job growth, and maintain the high level of service Pennsylvania consumers expect.”

Shapiro said he’s “laser focused” on bringing more power onto the grid while keeping costs down for Pennsylvanians.

He said Pennsylvania is already a net energy exporter and natural energy leader, and that his administration wants to expand that through his Lightning Plan. Shapiro also noted that he has brought Pennsylvania utilities and PJM, the grid operator, to the table to discuss reforms that will further keep costs down.

“This study will build on that work,” he said.

Projections tied to data center expansion alone put anticipated new demand at roughly 22 GW to 30 GW, while expected new supply is closer to 6 GW to 12 GW.

That imbalance has led to recent policy moves to delay planned plant retirements. According to the U.S. Energy Information Administration, plans to retire nearly 11 GW of utility-scale electric generating capacity from the country’s power grid this year were delayed following an emergency order by the U.S. Department of Energy. Included on that list are Units 3 and 4 at Pennsylvania’s Eddystone Generating Station, which have a combined capacity of 760 MW.

Almost all scheduled retirements are coal-fired power plants or steam turbines and simple-cycle natural gas, accounting for 58% and 42%, respectively.