For the First Time in History, PJM Auction Fails to Procure Necessary Power Supply
Auction results reflect data center surge and roadblocks to new supply.
VALLEY FORGE, PA – PJM Interconnection failed to procure enough supply to meet expected future electricity demand in 2027. The capacity auction for the June 2027 through May 2028 delivery year dropped 5.2 percent below what’s needed to guarantee reliability. The price cap PJM negotiated with Pennsylvania governor Josh Shapiro limited cost increases, but the overall capacity bill remains over $16 billion per year at ratepayers’ expense.
The following is a reaction from Tom Rutigliano, senior advocate, Climate & Energy, at NRDC (Natural Resources Defense Council):
“Summer 2027 will be the first time in PJM’s history it expects to not have enough power to reliably meet demand because of new data center forecasts and the ongoing risk of fossil fuel generators failing during winter storms. Data centers are applying to connect to the grid much faster than the grid can keep up. Right now, PJM and its member utilities are promising power they simply don’t have.
“Most troubling is that there was only 956 MW of new supply, even though this was the third year of very high prices. That’s less than a 1 percent increase in supply. Delays in building transmission, supply chain issues, barriers to siting new renewables, and PJM’s interconnection queue have combined to leave the region locked up and simply unable to build power plants. We’re throwing money in a hole right now.
“PJM must take action to protect the public from cost and reliability impacts by requiring new data centers that want to connect to the grid bring their own capacity. Otherwise, electricity bills will continue to rise and reliability will suffer. Worse, nearly all of the billions of dollars that customers will be charged will go to existing power plants, not to new supply and transmission infrastructure PJM desperately needs.”
Background
PJM Interconnection is the regional transmission organization that manages the transmission and wholesale electricity market for 13 states and D.C. in the eastern United States and serves about 65 million people. PJM states include Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. The PJM board has yet to vote on a Critical Issue Fast Path proposal to address data center load.
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, Bozeman, MT, Beijing and Delhi (an office of NRDC India Pvt. Ltd). Visit us at www.nrdc.org and follow us on Twitter @NRDC.