AI Data Centers Are Reviving Obsolete ‘Peaker’ Power Plants in Chicago; PJM Prices Hit Record Cap

A decades-old oil-fired power plant in Chicago’s Pilsen neighborhood was expected to shut down for good next year. Instead, the eight-unit Fisk generating station is getting a new lease on life—thanks to the surging electricity demands of artificial intelligence.

The plant, owned by Houston-based NRG Energy, had rarely been used in recent years and was slated for retirement. That plan changed as data centers began drawing far more electricity than the existing supply could handle. In the PJM Interconnection region—the largest power market in the US—rising demand has pushed prices to their absolute legal limit, making older, standby "peaker" plants profitable again.

“We believe there’s now an economic case to keep them around,” said Matt Pistner, NRG’s Senior Vice President of Generation, explaining why the company withdrew Fisk’s retirement notice.

Pollution Concerns Resurface

The Fisk site has long been a flashpoint for environmental justice. While the massive coal-fired station on the property was famously closed in 2012, the remaining petroleum-fired peaking units still release pollutants, including sulfur dioxide, when activated. Environmental advocates warn that keeping these facilities online disproportionately impacts the surrounding low-income communities. Federal data indicates that while peakers account for only about 3% of US electricity generation, they represent nearly one-fifth of the nation’s total installed capacity.

Grid Strain and Policy Signals

PJM, which manages the grid across 13 states, is feeling the pressure acutely. Capacity payments jumped more than 800% this year, and recent auction data shows prices hitting a record $333.44/MW-day cap. Roughly 60% of oil, gas, and coal plants in the region that were scheduled to retire have delayed or canceled those plans to meet the AI-driven load growth.

Summary

The explosive growth of AI data centers is forcing a reversal in US energy transitions, reviving aging fossil-fuel infrastructure like Chicago’s Fisk peaker plant. Previously slated for closure by NRG Energy, these oil-fired units are now being retained to stabilize the PJM grid, where capacity prices have hit a record $333.44/MW-day cap. The move highlights a growing conflict between tech-driven energy demand and environmental goals, as "peaker" plants—essential for preventing blackouts—often operate in vulnerable communities.

Frequently Asked Questions (FAQs)

Q1: What are “peaker” power plants? 

Power stations designed to run only during periods of peak electricity demand, such as heatwaves or grid emergencies.

Q2: Why is the Fisk station in Chicago significant? 

While its coal unit closed in 2012, the remaining oil-fired units are now being kept online due to AI demand, reigniting concerns about local air quality in the Pilsen neighborhood.

Q3: How does AI affect the power grid? 

AI chips consume significantly more power than traditional servers. PJM recently increased its load forecast by 5,250 MW primarily due to data center growth.

Q4: What is the PJM "Capacity Auction"? 

A market where grid operators pay plants to ensure they are available for future demand. Prices hit the maximum legal cap of $333.44 per megawatt-day due to supply shortages.

Q5: Are there cleaner alternatives? 

es, including grid-scale battery energy storage systems (BESS). However, deployment is currently lagging behind the immediate surge in demand.