PJM power capacity auction clears at record high price of $269.92/MW-day for most of footprint

PJM Interconnection's capacity market auction for the 2025/2026 delivery year cleared at record high prices of $269.92/MW-day for much of the PJM footprint, compared to $28.92/MW-day for the 2024/2025 auction, due to tighter supply, higher demand and market rule changes, the grid operator said July 30.

"The significantly higher prices in this auction confirm our concerns that the supply/demand balance is tightening across the RTO," Manu Asthana, PJM's president and CEO, said in a statement.

"The market is sending a price signal that should incent investment in resources," he said.

The highest base residual auction clearing price was previously $$174.29/MW-day for the 2010/2011 delivery year, according to PJM data.

"We saw a reduction of about 6,600 MW of generation that either offered into the BRA ... from resources that had already retired or were granted must offer exceptions signaling their intent to retire, so supply was down in the auction," Stu Bresler, PJM's executive vice president of market services and strategy, said during a conference call with reporters.

Additionally, peakload increased from 150,640 MW in the last auction to 153,883 MW in this auction, he said.

Finally, PJM said Federal Energy Regulatory Commission-approved market reforms, "including improved reliability risk modeling for extreme weather and [capacity] accreditation that more accurately values each resource's contribution to reliability," played a role in the higher capacity prices.

Additionally, the BGE and Dominion Zones, which are transmission capacity constrained, limiting the ability to import power, cleared at even higher prices of $466.35/MW-day and $444.26/MW-day, respectively.

Regarding the prospect of increasing power supplies, PJM said it "remains concerned with the slow pace of new generation construction," as roughly 38,000 MW of resources have "already cleared PJM's interconnection queue but have not been built due to external challenges, including financing, supply chain and siting/permitting issues."

Steve Piper, director of energy research at S&P Global Commodity Insights said his team had forecast clearing prices at nearly $200/MW-day, largely due to the factors cited by PJM.

The next base residual capacity auction, for the 2026/2027 delivery year, is currently scheduled for December 2024, PJM said in the statement.