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.
What Drove This Spike?
Several factors have contributed to this record-setting capacity price:
- Tightening Supply-Demand Balance: Energy demand continues to rise, driven by data center expansions, electrification of buildings and vehicles, and manufacturing. The precarious balance has been exacerbated by generation deactivations, primarily among fossil fuel plants. To this end, at the time of publication, there are 27 generator deactivations scheduled between August 2025 and June 2027. The retirements total 8482.7 MW, 61% of which is from aging coal plants.
- New Demand Outpacing New Generation: The pace of new generation construction is not keeping up with rising demand. Simply put, it takes much longer to build new power plants than it does data centers (a major contributor to demand). For instance, it takes roughly two years to construct an average natural gas plant, four to seven years to build a coal plant, and five to 15 years for a nuclear power facility. In comparison, traditional data centers can take 18-24 months to complete, depending on power availability.
- Interconnection Congestion/Supply Chain Issues: Bringing new generation online has been slowed by a large backlog in PJM's interconnection queue. While PJM has cleared over 60% of its backlog under recent FERC-approved reforms and plans to process another 63,000 MW in 2025 and 2026, many approved projects still face delays from permitting challenges and supply chain issues. For their part in the equation, PJM is working to speed the process to clear the queue by mid-2026 and introduce new policies to bring more resources to market.
Cleared Megawatts (UCAP) by New Generation/Uprates/Imports by Delivery Year from PJM
Overall these market pressures are not expected to subside in the near term, which means capacity prices could remain elevated in upcoming auctions as well.
Comparing to Past Auctions
A quick look at the recent PJM capacity auction history highlights the magnitude of this year’s increase:
- 2024/2025 Auction: $28.92/MW-day
- 2025/2026 Auction: $269.95/MW-day
- 2026/2027 Auction: $329.17/MW-day (FERC cap)
This dramatic upward trajectory signals a clear shift in the market landscape.
PJM’s 2026/2027 capacity auction cleared at $329.17/MW day—the highest price allowed under federal rules and a 22% year over year jump. That means a business that paid around $5,300 in capacity charges for 2024/2025 could face $60,000+ annually starting June 1, 2026 unless they engage a proactive strategy.
System demand is accelerating faster than generation additions, tightening supply and raising urgency to act. Let’s talk. Our team can evaluate your load management strategy, explain demand response opportunities, and build a custom plan to safeguard your energy budget.