VALLEY FORGE, PA — PJM Interconnection secured less power than required for the 2028-29 delivery year as electricity demand continued to outpace supply, leaving the 13-state grid operator 6,831 megawatts short of its reliability target despite capacity prices reaching a federally approved ceiling.
The auction cleared 138,318 megawatts of unforced capacity from power generation and demand-response resources, PJM reported. An additional 10,864 megawatts obtained through Fixed Resource Requirement arrangements brought total committed capacity to 149,182 megawatts.
The shortfall means PJM would enter the delivery year with slimmer reserves and greater operating risk, though it does not necessarily indicate the grid will be unable to meet electricity demand. The system retains a projected reserve margin of 14.7%.
It marked the second consecutive capacity auction in which the entire PJM territory failed to procure enough supply to satisfy the one-day-in-10-years reliability standard. The previous auction produced a shortfall of about 6,500 megawatts.
PJM plans to seek Federal Energy Regulatory Commission approval for a special backstop procurement in September to address the near-term supply gap.
The auction price reached the FERC-approved cap of $325 per megawatt-day across the PJM footprint, down 2.5% from the $333.44 cap in the previous auction. It was the third auction conducted under a temporary price collar intended to limit volatility for consumers and power suppliers.
The cleared capacity multiplied by the auction price represents about $16.4 billion. PJM cautioned that the figure is not equivalent to the total cost passed to electricity customers because utilities and other buyers may secure power through self-supply arrangements or bilateral contracts.
“These auction results show that demand for electricity continues to grow faster than electricity supply,” PJM President and Chief Executive Officer David Mills said.
PJM’s forecasted peak demand for the 2028-29 delivery year was about 2,000 megawatts higher than the forecast used in the previous auction, reflecting continued growth from data centers and other large electricity users.
Supply offered into the auction increased by 3,447 megawatts to 139,595 megawatts. Cleared auction capacity rose by 3,733 megawatts, but only 525 megawatts came from new generation or upgrades to existing plants.
Natural gas accounted for 46% of cleared and separately committed capacity, followed by nuclear power at 20% and coal at 18%. Demand response represented 5%, while hydroelectric power accounted for 4%, wind and oil each contributed 2%, and solar supplied 1%.
Accredited natural gas capacity increased by 5,639 megawatts, partly because of revised capacity ratings and coal plants converting to gas. Coal capacity declined by 2,941 megawatts as plants retired or switched fuels, while solar capacity increased by 651 megawatts.
The results intensify pressure on PJM to accelerate new power projects while managing demand from data centers and other large customers. The grid operator is clearing its interconnection backlog, creating an expedited pathway for as many as 10 state-sponsored generation projects and developing rules that could require large new loads to reduce consumption during periods of system stress.
PJM also began facilitating long-term agreements between large electricity users and power suppliers in June. Those contracts, which could extend for 10 years or longer, are intended to support new generation, energy storage and demand-response projects.
The grid operator plans to file its backstop procurement and large-load management proposals with FERC in the coming weeks. Its next capacity auction, covering the 2029-30 delivery year, is scheduled for December.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.