PJM Capacity Auction Misses Target by 6.8 GW for Third Straight Year
PJM Interconnection’s latest capacity auction fell 6,831 megawatts short of what the grid operator needs to guarantee reliability, ZeroHedge reports, marking the third straight year the largest US power grid has missed its target. The auction for the 2028/2029 delivery year secured 138,318 MW of unforced capacity plus demand response, with an additional 10,864 MW from Fixed Resource Requirement regions, but the total still fell below PJM’s one-event-in-10-year reliability standard. PJM serves 67 million customers across 13 states and Washington, DC, including Virginia’s Data Center Alley, the largest concentration of data centers in the country.
The clearing price hit the FERC-approved cap of $325 per megawatt-day. Without that cap, PJM says prices would have landed at $554.72, a 70% jump that will show up on utility bills regardless. Payouts to generators matched the prior auction’s all-time high of $16.4 billion. PJM plans to seek FERC approval in September for a “Backstop Procurement” to close the gap, part of a broader effort to shift more cost responsibility for new demand onto data center operators. PJM CEO David Mills called the current supply-demand imbalance “untenable.”
What It Means for Subcontractors
- Gas-fired generation and battery storage EPC packages are likely to accelerate across PJM’s 13-state footprint (mid-Atlantic through Ohio and Illinois) as the grid operator pushes for new capacity ahead of the September FERC filing on Backstop Procurement.
- Electrical, mechanical, and civil subs working data center construction in Virginia’s Data Center Alley should expect continued pressure on interconnection timelines as PJM works to shift new-load costs onto hyperscalers rather than ratepayers.
- With clearing prices already at the regulatory cap and shortfalls running three years straight, expect more RFPs for peaker plants and battery installations in the near term as generators respond to the $16.4 billion capacity payout signal.
