PJM Capacity Prices Soar to Another Record High Amid Persistent Supply Crunch
PJM’s annual capacity auction resulted in record high prices for the second straight year. The results signal the market’s urgent need for more supply to meet spiking demand from data centers. The auction also saw a substantial rise in the amount of capacity contributed by renewable sources, driven by new rules mandating their participation.
Capacity prices for 2026/2027 jumped to $329.17/MW-day, up $59.25, or nearly 22%, from the prior sale, according to results posted July 22. Without the FERC-approved market cap, prices would have risen even further, reaching $388.57/MW-day, according to PJM’s analysis. Auction revenues jumped to $16.1 billion, a gain of 9.5% from the $14.7 billion value in the 2025/2026 auction.
PJM’s high prices stemmed from an unusually large procurement target, reflecting a peak load forecast of over 159 GW – more than 5 GW above the prior auction – and a 19.1% installed reserve margin. PJM ultimately cleared 134 GW of unforced capacity, yielding an installed reserve margin of 18.9%, just below the target.
The amount of accredited wind capacity clearing the auction more than doubled from the prior year. In total, 3.7 GW of accredited wind capacity cleared, out of 4.5 GW on offer. The surge was driven by new market rules requiring market participation among renewable generators. It also reflected a slight rise to 41% in wind’s reliability valuation, called the Effective Load Carrying Capability (ELCC). Fears among clean energy trade associations that onerous performance penalties would sideline renewable resources did not materialize.
Meanwhile, nearly 1.6 GW of accredited solar capacity cleared the auction. This represents a gain of 230 MW, or 17%, from the prior auction. This comes even as solar capacity resources were derated to between 8% and 11% of nameplate capacity due to a lower ELCC class rating.
Renewable generators are benefitting handsomely from the elevated prices, a small measure of relief for an industry reeling after the Trump administration signed into law legislation that eliminates billions-of-dollars in federal subsidies.
The auction showed some signs that efforts to add new capacity are starting to bear fruit. The auction cleared nearly 2.7 GW of capacity from new generation, the first such gain in the last four auctions.
