Powering AI: How Exelon’s Data Center Strategy is Reshaping the US Grid in 2025

Industry Adoption: How Exelon is Navigating the AI-Driven Data Center Power Surge

The energy industry is witnessing a seismic shift as the artificial intelligence boom fuels an unprecedented demand for power, and no company is more central to this transformation than Exelon. The utility’s strategy for accommodating data centers has evolved dramatically, moving from incremental adaptation to a fundamental business model overhaul. Between 2021 and 2024, Exelon was managing rapid but somewhat predictable growth. Its “high probability” data center load queue surged from 6 GW to 11 GW in a single quarter of 2024, an 83% jump that signaled an accelerating trend. During this period, the company’s approach was characterized by direct, project-based infrastructure partnerships, such as the 2022 collaboration with Digital Realty to build a new substation in Illinois. However, this era also saw the emergence of a critical threat: “co-location,” where tech giants sought to bypass the grid by connecting directly to power plants. Exelon’s June 2024 regulatory challenge against the Amazon-Talen Energy deal was a defensive, yet pivotal, move to protect the traditional utility model.

The year 2025 marked a definitive inflection point. The scale of demand exploded, with Exelon’s data center interconnection pipeline skyrocketing from 17 GW in February to 36 GW by May—more than doubling in a few months. This exponential leap rendered incremental adjustments obsolete. In response, Exelon’s strategy shifted from defense to a large-scale, multi-front offensive. The company announced a landmark $38 billion capital plan for 2025-2028, supplemented by a separate $15 billion for data center-specific transmission upgrades. This massive financial commitment is paired with a groundbreaking commercial innovation: the Transmission Service Agreement (TSA). First implemented with Amazon in November 2025, the TSA model forces developers to fund their own grid upgrades, effectively de-risking Exelon’s capital outlay and filtering speculative projects. Most significantly, Exelon is now pursuing a strategic pivot to own and operate power generation assets, with a legislative push planned for 2026. This variety of actions—massive capital deployment, innovative commercial contracts, and a fundamental business model evolution—reveals that powering data centers is no longer just an operational task for utilities; it is the core strategic driver reshaping the entire energy landscape.

Table: Exelon’s Strategic Capital Investments

Table: Exelon’s Key Data Center Partnerships and Engagements

Geography: How Exelon’s Mid-Atlantic and Midwest Territories Became Data Center Battlegrounds

The geographic focus of the data center power crunch has intensified within Exelon’s core service territories. Between 2021 and 2024, activity was heavily concentrated in the ComEd region around Chicago, already a top-five US data center market. The 2022 partnership to build a substation for Digital Realty in Franklin Park, Illinois, and the CEO’s 2024 forecast of a 900% demand jump in the area, cemented Illinois’s status as a primary growth zone. Simultaneously, the regulatory challenge against the Amazon-Talen deal in Pennsylvania thrust the PJM Interconnection market into the spotlight as the key battleground over the future of grid connections.

Since 2025, these same regions have become the epicenter of strategic transformation. Illinois remains a hotbed, with ComEd’s role in enabling the Illinois Quantum Manufacturing Park showing its deep integration into the state’s high-tech ambitions. However, the PJM market, which includes Exelon’s BGE, PECO, and Pepco utilities, has become the main stage for market-defining changes. The November 2025 PECO-Amazon TSA in Falls Township, Pennsylvania, established a new commercial model for the entire Mid-Atlantic. Furthermore, Exelon’s planned 2026 legislative push to own generation assets is explicitly targeted at the PJM market. The restart of the Three Mile Island nuclear plant, also in Pennsylvania, to directly power Microsoft data centers further validates this region as the leading edge of the industry’s search for solutions. These territories are leading not just due to land and fiber, but because they are where the critical battles over power infrastructure, investment, and market rules are being fought and won.

Technology Maturity: Exelon’s Shift from Grid Hardening to AI-Enabled Infrastructure

Exelon’s technology adoption strategy has matured in lockstep with the escalating demands of the data center industry. During the 2021-2024 period, the focus was on deploying commercially mature technologies to harden the existing grid. This included building traditional infrastructure like substations for Digital Realty (2022) and implementing established software like the AVEVA PI System (2021) for predictive maintenance. While the company began piloting advanced applications, such as using NVIDIA’s platform for synthetic data to train inspection AI (2023), the primary goal was to enhance the reliability of existing systems. The migration to Oracle Cloud (2022) was a standard enterprise IT modernization effort aimed at internal efficiency.

The period from 2025 to today reflects a significant shift toward deploying and scaling next-generation technologies to actively manage a new grid paradigm. The use of AI is no longer a pilot project; it is a core operational tool. The partnership with NVIDIA for autonomous grid inspection (September 2025) has scaled into a vital function for maintaining a strained network. The most impactful innovation, however, is the commercialization of the Transmission Service Agreement (TSA). While a contract, it functions as a novel financial technology for risk management, moving from a concept to a commercial reality with the PECO-Amazon deal. This, combined with the strategic pivot toward owning generation assets—with a clear preference for reliable, carbon-free nuclear power—signals a profound technological and business model evolution. Technology is no longer just about maintaining grid assets; it is about re-architecting the entire utility business to serve a new, dominant class of energy consumer.

SWOT Analysis: Exelon’s Data Center Strategy Evolution

Forward-Looking Insights and Summary

The data from 2025 signals a clear and aggressive path forward for Exelon, solidifying its role as a kingmaker in the AI power race. The year ahead will be defined by the execution of its ambitious strategy, and market actors should watch several key signals. First and foremost is the 2026 legislative push in the PJM market. Its success or failure will determine if Exelon can complete its transformation from a pure T&D utility into an integrated provider of regulated, clean-power generation, a move essential for meeting long-term data center demand. Second, the widespread adoption of the Transmission Service Agreement (TSA) model across all of Exelon’s operating companies will be a critical indicator of its ability to de-risk its $53+ billion investment portfolio.

Finally, the conversion rate of Exelon’s massive 36 GW data center pipeline will be the ultimate test of the market. The difference between the total pipeline and the 18 GW in committed projects with paid deposits represents the speculative froth in the market. How quickly that gap closes will reveal the true, durable demand. In summary, Exelon has adeptly navigated the initial data center surge and is now proactively architecting the market in its favor. The coming 12-18 months will be a stress test of this strategy, determining whether its monumental investments and bold regulatory maneuvers can translate the unprecedented demand for AI into a generation of sustainable growth.

Frequently Asked Questions

Why is Exelon spending so much money on the grid?
Exelon is making massive investments to accommodate the explosive and unprecedented power demand from the AI and data center boom. The article details a $38 billion capital plan (2025-2028) for general grid modernization, supplemented by a separate $15 billion specifically for transmission upgrades to support its 36 GW data center project pipeline.

What is a Transmission Service Agreement (TSA) and why is it significant?
A Transmission Service Agreement (TSA) is a new commercial model pioneered by Exelon where a data center developer pays directly for the specific grid upgrades its project requires. It is significant because it de-risks Exelon’s capital investment, filters out speculative projects, and sets a new industry precedent for how the costs of connecting massive data centers are managed.

How has Exelon’s strategy toward data centers evolved?
Exelon’s strategy has shifted from being reactive to proactive. Between 2021-2024, it focused on direct infrastructure partnerships and defensively protecting the traditional utility model. Since 2025, facing exponential demand, its strategy has become a multi-front offensive, involving massive capital deployment, innovative contracts like the TSA, and a fundamental pivot to re-enter power generation.

What was the ‘co-location’ threat and how did Exelon handle it?
Co-location was a threat where tech giants, like Amazon, sought to bypass the utility grid by connecting their data centers directly to power plants, which would have allowed them to avoid paying their share of grid costs. Exelon successfully fought this by launching a regulatory challenge at FERC against the Amazon-Talen Energy deal, which resulted in the deal being rejected in November 2024, thereby protecting the regulated utility model.

What role does nuclear power play in Exelon’s strategy?
Nuclear power is positioned as a key source of reliable, carbon-free energy to meet the immense power needs of data centers. The article highlights the $1 billion federal loan to restart the Three Mile Island nuclear plant, with the explicit purpose of supplying power to data centers in the region, validating nuclear’s role within Exelon’s broader market strategy.