Continued High PJM Prices Show Need to Better Manage Data Center Load Growth and Add New Clean Energy Supply
VALLEY FORGE, PA – Today, the nation’s largest grid operator, PJM, announced results for its capacity auction for the 2028/2029 Delivery Year. The cost to consumers from the auction totaled $16.4 billion, which will be paid by residences and businesses in the PJM region, keeping bills high through May 2029. Additionally, PJM’s auction once again did not meet the region’s target reliability cushion; the amount of power procured dropped to 5.6 percent below the target amount of electricity supply.
The following is a reaction from Claire Lang-Ree, Advocate, Climate & Energy at NRDC (Natural Resources Defense Council):
“This year’s auction confirms an unacceptable trend: data center load growth is outpacing new electricity supply, degrading reliability, and keeping prices at the cap. A limited number of new power plants joined PJM for this auction, proving that new supply simply can’t keep up with the pace of data center load growth, and everyone is paying the price. This familiar story is no longer abstract: just last week, record-breaking extreme heat caused by climate change severely tested the PJM system and led to higher electricity prices.
“PJM can solve this problem in the near term by removing large loads – like data centers – that have not brought their own new supply from the capacity auction, implementing a strong ‘Connect and Manage’ construct to triage reliability risks, and working with states to make sure data centers pay for power plants and transmission built to serve them without risking public dollars. Ultimately, PJM needs all hands on deck–including elected officials, regulators, developers, and data center companies themselves–to quickly interconnect gigawatts of new, low-cost clean energy. The 67 million PJM residents literally can’t afford to suffer any more record-breaking auctions or near-blackout events.”
Background:
PJM Interconnection is the regional transmission organization that manages the transmission and wholesale electricity market for about 67 million people in thirteen states and Washington D.C. PJM’s capacity auction anticipates how much electricity will be needed in the future and what it will cost for that power to flow without interruption. The capacity auctions have resulted in over-reliance on expensive and polluting fossil fuels. In addition, new energy projects are stuck in PJM’s long queue of projects waiting approval, including renewable energy projects. PJM’s board may soon approve a proposal for Reliability Backstop Procurement and Connect and Manage, which aims to address potential power shortfalls.
NRDC (Natural Resources Defense Council) is an international nonprofit environmental organization with more than 3 million members and online activists. Established in 1970, NRDC uses science, policy, law and people power to confront the climate crisis, protect public health, and safeguard nature. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Beijing and Delhi (an office of NRDC India Pvt. Ltd).