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Data Centers "Primary Reason" For High PJM Capacity Prices: Market Monitor
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by Tyler Durden
Thursday, Oct 02, 2025 - 11:45 PM
By Ethan Howland of Utility Dive
Capacity prices — a cost that is ultimately paid for by electricity consumers — surged in PJM’s last two July capacity auctions.
An Amazon Web Services data center near single-family homes on July 17, 2024, in Stone Ridge, Virginia. Data center load resulted in $16.6 billion in capacity auction revenue in the PJM Interconnection’s last two capacity auctions, according to a report released on Oct. 1, 2025, by the grid operator’s market monitor
The 2024 auction results led to double-digit electric bill increases for some utility customers in PJM’s footprint, which covers parts of 13 Mid-Atlantic and Midwest states and the District of Columbia.
PJM holds capacity auctions to help ensure that it has adequate power supplies to meet future needs. In the last auction, PJM bought capacity for a one-year period that starts on June 1. The grid operator is preparing to hold its next auction in early December to buy capacity for a year beginning on June 1, 2027.
Monitoring Analytics contends it is “misleading” to say that PJM’s recent capacity market results simply reflect tightening supply and demand.
“The current conditions are not the result of organic load growth,” it stated. “The current conditions in the capacity market are almost entirely the result of large load additions from data centers, both actual historical and forecast.”
Also, the “extreme uncertainty” in data center load forecasts is unprecedented and “raises questions about the meaning of clearing a capacity auction based on those forecasts,” Monitoring Analytics said.
In June, the market monitor recommended requiring new data centers to supply their own generation instead of tapping into existing power supplies in PJM.
“The impact of the uncertain forecast of data center load on other customers would be limited or eliminated” by the requirement, Monitoring Analytics said in the report.
PJM is in the middle of a fast-track stakeholder process to develop new rules for adding large data centers to its system with a goal of filing a proposal before the end of the year at the Federal Energy Regulatory Commission.
As part of the process, PJM is proposing to bolster its load forecasting for data centers and other large loads, according to an Oct. 1 presentation from PJM staff. Under the proposal, state utility commissions could review and provide feedback on large load adjustments before they are included in PJM’s load forecast.
Utilities would also have to ask if any data center proposals in their service territory are duplicative proposals. Staff suggested requiring large load customers to post financial security for the capacity they plan to buy in an auction.
https://www.zerohedge.com/economics/data-centers-primary-reason-high-pjm-capacity-prices-market-monitor
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U.S. Naval Institute @NavalInstitute - #OTD 1986, @USNIBooks published FLIGHT OF THE INTRUDER by Stephen Coonts. Ronald Reagan helped it become a bestseller when Fortune Magazine ran a photograph of the President with a copy of the book on his desk in the Oval Office. Reagan was also a fan of THE HUNT FOR RED OCTOBER.
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https://x.com/NavalInstitute/status/1973377453591601292
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