PJM’s 2028/2029 Capacity Auction Clears at Price Cap for Third Time
PJM Interconnection announced results from its 2028/2029 Base Residual Auction, with the clearing price set at the preset price cap for the third straight time.
The clearing price came in at $325/MW-day for the entire PJM footprint, a 2.5% decrease from the record 2027/2028 auction cap of $333.44/MW-day and 1.3% lower than $329.17/MW-day in the 2026/2027 auction, as shown in the chart below.
Like the last three auctions, the elevated clearing price level indicates a supply and demand imbalance exists, which could impact grid stability and system reliability. PJM President and CEO David Mills said, “These auction results show that demand for electricity continues to grow faster than electricity supply.”
Given ongoing increases in peak demand forecasts and the conditions PJM has been observing, including a shortfall of approximately 6,500 MW in the previous capacity auction, the auction’s results are relatively unsurprising.
The eye-opening part of PJM’s report, though, is the simulation that is run after removing the temporary price collar.
Without the cap and floor price applied, they estimate the clearing price would have been $554.72 per MW-day, an incredible 71% higher than the $325 result—a larger disparity than 59% in the prior 2027/2028 auction simulation at $529.80 per MW-day vs the $333.44 per MW-day clearing price, as well as the $388.57 per MW-day simulation price that was 18% higher than the $329.17 per MW-day clearing price result in the 2026/2027 auction.
A total of 149,182 MW in unforced capacity generation was secured to serve forecasted peak electricity demand during the delivery year beginning June 1, 2028 through May 31, 2029.
Secured resources in this 2028/2029 auction include 46% natural gas, 20% nuclear, 18% coal, 5% demand response, 4% hydro, 2% wind, 2% oil and 1% solar. This compares similarly to the supply mix of resources cleared in the prior 2027/2028 auction: 43% natural gas, 21% nuclear, 20% coal, 5% demand response, 4% hydro, 2% wind, 2% oil and 1% solar.
All of the 26,825 MW of coal resources offered into the auction were cleared, though the level is 10% less than 29,766 MW cleared in the prior auction (30,366 MW offered).
Total cleared capacity is higher than the prior auction by 3,458 MW, with the largest increases coming from natural gas and solar resources. However, the growth in forecasted peak demand more than outstripped new resource additions.
The capacity procured is short of PJM’s reliability requirement by 6,831 MW, resulting in a 14.7% total reserve margin compared to the 20.0% reserve requirement.
This does not necessarily mean the PJM grid will be unable to serve load—but it would have to operate with slimmer reserves and greater level of risk since the committed supply is less than what would be required to meet the one-event-in-10-year reliability standard.
In response to the trend of auction results and ongoing supply/demand imbalance, PJM is taking action.
PJM is also working to clear the interconnection queue backlog by:
- implementing a new streamlined cycle process
- creating a temporary expedited track
- leveraging AI to reduce study timelines;
- facilitating new bilateral, long-term agreements between large load customers and generation providers; and
- maximizing the performance and availability of existing generation resources
It is also planning a Reliability Backstop Procurement auction, meant to address near-term generation supply needs. It is scheduled for September, though the protocols and rules are still being decided upon, so that may change.
PJM has been operating auctions for their three-year forward planning cycle on a compressed schedule but are slated to return to normal next year in May 2027 with the 2030/2031 auction.
The next Base Residual Auction for the 2029/2030 delivery year will be held later this year in December 2026, which will also be confined by the pre-determined cap and price floor.