PJM's capacity auction clears at maximum price as reserve shortfall grows to 6.8 GW

PJM Interconnection's capacity auction for the 2028/2029 delivery year cleared at the $325 per megawatt-day price cap across its entire region, marking the second consecutive year the grid operator has fallen short of its reliability target. According to RTO Insider, the auction procured 6,831 MW less capacity than the reliability requirement, with the price cap imposed by a collar on prices. SiliconReport reported that the auction secured 138,318 MW of capacity for the 13-state grid, but demand from data centers and other large users continues to outpace supply.

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RTO InsiderPJM Capacity Auction Clears at $325 Cap, 6.8 GW Short of Reliability RequirementSiliconReportPJM Capacity Auction Clears at Price Cap Amidst 6,831 MW Reliability Shortfall

Only about 525 MW of new resources were secured in the auction, a decline from 774 MW in the previous year, as reported by utilitydive. The widening reserve shortfall, which grew from roughly 6.5 GW to 6.8 GW, has fueled criticism of the market's ability to attract new generation and demand response. utilitydive noted that critics are warning of a potential 'intervention doom loop' as reliability challenges mount.

"demand from data centers and other sources continues to outpace supply."

The trend underscores the accelerating pressure on PJM's grid from the rapid growth of data centers and other industrial loads, which has outpaced the construction of new power plants and demand-side resources.

"potential 'intervention doom loop' as reliability challenges mount"

The phrase captures a growing anxiety that repeated market interventions to secure reliability could distort long-term investment signals, making it harder for the grid to organically attract the capacity it needs.

The results raise questions about whether PJM's market design can keep pace with the speed of demand growth, particularly as the shortfall has widened even as the price cap has acted as a ceiling. RTO Insider noted that the auction capped out at the $325-MW/day maximum, meaning the market signaled a need for more capacity at that price but could not clear enough to meet reliability targets. With each successive annual auction showing a larger gap, stakeholders are watching closely for any rule changes or federal interventions that might follow.