On July 14, grid operator PJM released the results of its latest capacity market auction for the 2028-2029 delivery year. Prices hit the federally approved cap of $325/megawatt-day, but the amount of procured capacity came up short of PJM&#x27;s reliability requirement by 6.8 gigawatts.<br>In other words, prices went as high as they were allowed to go but still didn&#x27;t incentivize enough generation to meet the reliability requirement PJM wanted. Although PJM has other options to secure that capacity, the results of this latest auction underscore mounting concerns about rising prices and reliability in the region managed by the grid operator, which provides electricity for 67 million people across 13 states. And power demand from data centers is contributing to these issues.<br>Joining Dan Testa on this episode to talk through some of these issues is Darren Sweeney, a senior reporter at S&amp;P Global Energy. Sweeney interviews Paul Segal, CEO of LS Power, a private independent power producer with a major presence in PJM, and Tanya Peevey, an S&amp;P Global Energy CERA analyst for North American power and renewables.

Grid operator PJM juggles reforms as power auction results hit price cap again

Energy Evolution

Hello and welcome to Energy Evolution, the podcast where we examine the energy transition from every angle we can. I'm Eklavya Guptey. In this episode, we're going to be discussing and dissecting the results of the last forward capacity auction in PJM.

PJM is a massive wholesale power market stretching from the District of Columbia to Ohio and from New Jersey down to North Carolina. On July 14th, PJM released the results of its latest capacity market auction for the 2028-2029 delivery year. Prices hit the federally approved cap, but the amount of procured capacity came up short of PJM's reliability requirement.

In other words, prices went as high as they were allowed to go but still didn't incentivize enough generation to meet the reliability requirement that the grid operator wanted. Now, there are other ways to secure that generation, which we're going to get to later in this episode. But this latest auction has kind of underscored many of the issues plaguing PJM, which is that rising prices are causing the electricity bills of customers who get their power from the market to skyrocket.

And yet that price, apparently, is still not high enough to encourage power companies to start investing to build new generation, which can increase the supply and begin to help put some downward pressure on power prices. And then add to the mix that data center development is contributing to rising prices in PJM, according to its independent market monitor, more so than pretty much any other region of the US.

So that's a very oversimplified description of a deeply complicated market and situation. But you can see already that what's happening in PJM touches on almost every issue in the energy transition.

Grid operator PJM juggles reforms as power auction results hit price cap again

Read the full transcript

The candid version is on a podcast,
not the earnings call.

Grid operator PJM juggles reforms as power auction results hit price cap again

Read the full transcript

The candid version is on a podcast, not the earnings call.

The candid version is on a podcast,
not the earnings call.