PJM's power auction bought less generation at its price cap
PJM's own auction reports, read in one column: the price of scarcity climbed toward its ceiling while the new generation it bought fell to a few hundred megawatts, and PJM has asked FERC to stop counting some of the demand behind that climb.
A capacity auction has an entire job: charge enough for scarcity that someone answers it with new supply. PJM’s own results, read together, show that job finishing half done. The price has climbed toward the ceiling regulators allow it to reach. The new generation cleared in the same auctions has fallen instead, sitting lower in the most recent years than it did before that ceiling existed. On August 13, PJM asked federal regulators to stop counting some of the demand behind that climb, instead of waiting on supply that has not shown up.
PJM Interconnection is the nonprofit that runs this market for 67 million people across 13 states and the District of Columbia. Once a year it holds a Base Residual Auction, contracting capacity years ahead of delivery; where its supply curve crosses demand sets what a cleared megawatt gets paid. PJM’s own retained monitor states what that payment is for more plainly than PJM itself does: “In PJM, the capacity market exists to make the energy market work. Energy powers lights and computers and air conditioners. Capacity does not power anything.”
Demand under that market keeps growing. PJM’s own forecast puts summer peak load growth at an average of 3.6% a year over the next decade. What makes this slice of that demand different is not its size but its behavior: NERC’s own FAQ groups these as “computational loads,” including data centers and artificial-intelligence facilities.
NERC, a nonprofit reliability organization and not a government agency, issued a Level 3 Essential Action Alert on May 4, 2026, after observing that large-load reductions and significant oscillations “occur in seconds, leaving little or no room for real-time responses”. Registered utilities had until August 3 to respond, and NERC’s standards committee has since opened a project toward a formal reliability standard, due by the end of 2026.
PJM’s own account, published August 11, described a July 22 event in Virginia: a first drop of 2,970 MW as data centers switched to backup generation. Then a second wave of 1,099 MW followed, a swing of roughly 3,800 MW total.
The measurement starts with price. PJM’s own rest-of-RTO clearing price for the delivery year beginning in 2024 was $28.92 per megawatt-day; for the year beginning in 2027 it was $333.44, a rise of roughly eleven and a half times. The intervening 2025/2026 auction, the first year on the new basis, cleared $269.92; the Monitor’s own analysis of that same auction reports the same 18.6 percent reserve margin.
PJM changed how it accredits capacity partway through that span, moving to an unforced-capacity basis beginning with 2025/2026. That ratio spans two different denominations of the same market. The $333.44 price was an administrative ceiling. $28.92 was not — it was a real, unconstrained market-clearing price, set years before that ceiling existed. 809.6 megawatts did not clear the 2027/2028 auction because offers were priced above the cap.
The new-generation column moved the other way. The two auctions before the ceiling existed cleared 4,843.6 and 3,329.7 megawatts of new generation between them. The three auctions at the ceiling since cleared 1,474.6, 350.7 and 317.1 megawatts of new generation. Together, the two years before the cap bought close to four times as much new generation as the three years since, at a fraction of the price. Monitoring Analytics counted 43 new resources offered into the 2027/2028 auction, all solar, wind or battery storage, totaling 393.8 megawatts, against 1,385.6 megawatts offered the year before.
That earlier total included 632.9 megawatts of combined-cycle and combustion-turbine capacity, so the all-renewable count is true of 2027/2028 only — a composition change, not a like-for-like decline.
Reserve margins tell a similar story. On the RPM measure, both 2027/2028 and 2028/2029 cleared 5.6 percentage points under target, past the one-point line that triggers a tariff investigation. That is two of the three auctions needed for a mandatory Backstop Auction. PJM’s December 2025 announcement, when the 2027/2028 results were released, put that auction’s shortfall against the reliability requirement at 6,623 megawatts.
| Delivery year | Clearing price | At a cap? | New generation | RPM margin vs. that year’s target |
|---|---|---|---|---|
| 2022/2023 | $50.00 | No | 4,843.6 MW | 21.1% vs. 14.5% |
| 2023/2024 | $34.13 | No | 3,329.7 MW | 21.6% vs. 14.8% |
| 2024/2025 | $28.92 | No | 328.5 MW | 21.7% vs. 14.7% |
| 2025/2026 | $269.92 | No | 110.3 MW | 18.6% vs. 17.8% |
| 2026/2027 | $329.17 | Yes | 1,474.6 MW | 18.9% vs. 19.1% |
| 2027/2028 | $333.44 | Yes | 350.7 MW | 14.4% vs. 20.0% |
| 2028/2029 | $325.00 | Yes | 317.1 MW | 14.4% vs. 20.0% |
Total cleared capacity rose between the last two auctions, from 134,584.6 to 138,317.8 megawatts, attributed mainly to accredited-capacity-factor changes and previously unoffered megawatts, not new construction. New generation was 317.1 of that 138,317.8-megawatt total, just under a quarter of one percent.
The steelman is real. It is PJM’s own data. Roughly 53 gigawatts of generation projects hold signed interconnection agreements to PJM’s grid. Separately, PJM’s Reliability Resource Initiative selected 51 fast-tracked projects totaling 9,361 megawatts of unforced capacity, 90% of the projects online by 2030 and the rest by 2031, after every delivery year auctioned so far. PJM’s own report states what a cap does to supply: a price cap below the level its demand curve would otherwise clear can reduce the amount of investment, and therefore supply, in the region. That cap is currently in force under its own FERC docket.
Monitoring Analytics calculates the 2027/2028 auction’s cap suppressed revenue to $16.4 billion from an uncapped $26.3 billion, a 37.7% cut, on top of a 16.4% suppression the year before. The same monitor concluded the auction’s results were not competitive, a verdict its broader scorecard on the market’s structure, behavior and performance reaches independently and repeats unchanged in its 2026 first-quarter update.
The backward read, price climbing while new generation did not, is arithmetic on PJM’s own columns, and it holds up against the counterarguments above. The forward read is weaker. It depends on how much of that interconnection queue finishes on schedule, which this piece cannot observe. The next Base Residual Auction, for 2029/2030, is the test: if it clears below the price cap and procures new generation far above what recent auctions cleared, or if the RPM reserve margin returns to its 20% target without the demand exclusion IRAS proposes, the reading here is wrong.
IRAS is PJM’s proposed response to that gap. It defines a Large Load as a customer or group with combined peak demand of 50 megawatts or more, and would build a registry tracking each one’s size, location and backup generation. In an emergency, new Large Loads without their own supply would be curtailed “ahead of any action that would shut off traditional consumers, including residential consumers,” the first step in PJM’s ten-step chain of emergency actions.
Beginning with the 2029/2030 capacity auction, new Large Loads that bring no supply of their own would not be counted when PJM calculates what to procure. States and their local utilities, not PJM and not FERC, would decide how the retail costs of curtailment are split. Monitoring Analytics attributes 63.5% of the 2025/2026 auction’s cleared revenue, $9.3 billion, to data-center load. PJM’s own release for the 2026/2027 auction put the household increase at 1.5% to 5% of some bills, depending on the utility, the state and how costs pass through.
PJM asked FERC to act on the IRAS filing within 60 days of the August 13 filing date. The 2029/2030 Base Residual Auction is the first delivery year the exclusion would touch.