Energy News

PJM 2027–2028 Capacity Auction Results & the Impact on Capacity Costs

Laurie C — Mon, 22 Dec 2025 22:49:37 GMT

PJM announced the results of the 2027–2028 Base Residual Auction (BRA) at $333.44/MW-day. While the headline is familiar, the underlying signals are becoming harder for energy customers to ignore.

Once again, the auction cleared at the price cap, reinforcing that capacity resources remain tight across the PJM footprint. PJM procured 134,479 MW of capacity, which was 6,623 MW short of the region’s target reliability margin. It's the first auction in PJM history the entire RTO fell short, an outcome that highlights the growing strain the proliferation of data centers has placed on the system.

The results point to structural shifts that will influence capacity costs and risk exposure for years to come.

Demand Response Strategies to Offset Capacity Costs

Laurie C — Wed, 10 Sep 2025 17:13:23 GMT

Capacity costs have skyrocketed in just two years and the trend is expected to continue. For many businesses, these charges can make up a significant portion of the total electric bill. Demand response is one of the most effective strategies to offset PJM capacity costs, earn revenue, and strengthen your role in grid reliability. In this guide, we’ll demystify demand response, explain how it can play an important role in rescuing out of control energy budgets, and the simple steps you can take to get started.

Ten Ways to Control Your Business Capacity Costs

Laurie C — Wed, 13 Aug 2025 21:39:19 GMT

With PJM’s capacity prices surging, businesses need practical, actionable ways to control their capacity cost. It's not necessary to overhaul an entire energy strategy to start seeing results. Here are ten steps business leaders can take to mitigate capacity charges and protect their bottom line.

Proven Strategies to Offset Your PJM Capacity Costs

Laurie C — Wed, 13 Aug 2025 18:52:25 GMT

PJM’s recent auction results signal more than a short term reality. They point to a larger trend of tightening supply and increasing demand that’s likely to sustain high capacity costs in the years ahead. For businesses, this means that capacity-related cost increases are likely to persist unless proactive measures are taken.

The good news? There are steps you can take right now to reduce your exposure.

Understanding the Supply-Demand Imbalance

PJM’s capacity market is designed to ensure grid reliability, but the system is being stretched in ways that are new to the grid manager. Several key dynamics are driving persistent, upward pressure on capacity prices:

• Demand Growth Outpacing New Generation: Rapid demand expansion, caused primarily by the proliferation of large-scale data centers is putting unprecedented pressure on the grid. The resulting surge in electricity consumption is outpacing the addition of new generation resources. Analysts estimate data centers now account for over 90% of new power demand in the PJM service territory, driving capacity price increases.

• Limited Generation Additions: While investments in new generation projects are accelerating, the pipeline for generation remains constrained. New gas, coal, or nuclear facilities face long construction timelines and permitting hurdles, leaving a gap between current needs and available supply.

• Tight Reserve Margins: PJM’s current reserve margin (the amount of extra generation capacity available above forecasted peak demand) remains historically narrow. That leaves little cushion to absorb unplanned outages or weather-driven demand spikes. This is the result of:

- The retirement of older coal and nuclear units.

- Declining operational reliability in some gas-fired plants.

- A persistent backlog of new resources waiting for interconnection.

With less buffer, PJM is faced with more frequently relying on higher-cost resources and is more exposed to market shocks. These conditions directly influenced the latest capacity auction as PJM procured 134,311 MW of capacity and prices cleared at the market cap of $329.17/MW-day, a roughly 22% increase from the prior auction. Effectively, the structurally tight reserve margin amplified price volatility and contributed to the increase in capacity costs.

As long as supply consistently struggles to keep pace with escalating demand, cost increases will become the norm. Businesses across PJM need to take action to mitigate their exposure.

How PJM’s Capacity Price Spike Affects Your Bottom Line

Laurie C — Mon, 11 Aug 2025 05:05:07 GMT

PJM’s record-high capacity price is a substantial expense that will significantly inflate business energy bills. For example, an organization that paid around $5,300 in capacity charges for 2024/2025 could face $60,000+ annually starting June 1, 2026.

PJM 2026/2027 Capacity Auction Clears at $329.17 | Record-High Rates

Laurie C — Mon, 28 Jul 2025 16:44:15 GMT

On July 22, PJM announced the results of their latest capacity auction for the 2026/2027 planning year. The price came in at $329.17/MW-day, the highest price allowed under PJM’s FERC-approved price cap. Prices from the 2025/2026 auction (which brought more than an 800% increase, year-over-year reaching $269.92/MW-day) hit bills last month, while the most recent results discussed in this post will impact bills starting June 2026.

Auction Highlights: $329.17/MW-day Record

The most recent PJM Forward Capacity Auction resulted in a clearing price of $329.17/MW-day, reaching the maximum price permitted by the Federal Energy Regulatory Commission (FERC). This is a significant jump from last year’s clearing price of $269.92/MW-day and represents a 22% year-over-year increase.

Capacity payments across the PJM region are expected to total approximately $16.1 billion based on these results. This increase is paid by energy consumers throughout PJM.

Clearing price: $329.17/MW-day, up 22% from last year’s $269.92.
Total capacity procured: 134,311 MW (unforced capacity, UCAP).
PJM estimates the impact to power bills will equate to a year-over-year increase of 1.5%-5%.
Begins June 1, 2026 and runs through May 31, 2027.
The 2027/2028 capacity auction will be held December 2025.

How Do I Bring Energy Efficient Projects to My Team? Selling Value over Cost Savings.

Alternative Energy Source Staff — Tue, 27 Aug 2024 19:27:45 GMT

Selling the value of investing in energy efficiency across an organization, especially in competition for precious capital, can be a real challenge. Demonstrating the potential return on investment (ROI) through long-term cost reduction, along with all of the other factors of such a project, can seem like an impossible task.

PJM Capacity Prices Clear All-Time Highs

Laurie C — Fri, 02 Aug 2024 18:15:57 GMT

The $269.92/MW-day result of the PJM capacity auction for the 2025-2026 delivery year caught the attention of energy industry watchers. Comparatively, the 2024-2025 auction result was $28.92/MW-day. Simply put, that's over an 800% increase. These results are likely to have a substantial impact on electricity costs. As such, we want to provide our readers with some resources for managing these costs.

Below-Zero Natural Gas Prices In Texas

Laurie C — Mon, 06 May 2024 00:43:54 GMT

Reposted from Zero Hedge

Permian producers are not shutting in oil wells with associated natural gas despite the fact that the Texas regional gas price has been stuck at below-zero levels since early March. Major pipeline operators in the Permian basin haven't yet seen any effect of the negative gas prices at the Waha hub in West Texas on activity as producers are look to maximize oil realizations at West Texas Intermediate crude prices at above $80 per barrel.