

PJM and the capacity crunch
5 snips Jul 31, 2025
Steve Piper, Research Director for North American Power and Renewables at S&P Global, joins to discuss the recent record-breaking PJM capacity auction prices. He explains how inflated prices are designed to incentivize new generation amidst tight supply, driven largely by the surge in data centers. The conversation reveals concerns over low prices previously discouraging market participation, as well as the challenges of developing new resources and enhancing demand response strategies. Steve emphasizes the need for regulatory adaptations to navigate these complexities.
AI Snips
Chapters
Transcript
Episode notes
Capacity Crunch Signals Rising Costs
- The rising capacity prices signal a resource adequacy concern and higher costs for consumers.
- Higher wholesale prices translate directly into increased monthly electricity bills impacting customers.
Demand Response Limited by Accreditation
- Demand response contributes less capacity than nominal megawatts, roughly 60-70% credit.
- Despite strong price signals, demand response participation shrank in the latest PJM auction, indicating adoption challenges.
Adapt Demand Response for PJM Rules
- The demand response industry must adapt to evolving PJM rules and clarify capacity accreditation.
- Stakeholders should explore how emerging loads and distributed storage can enhance demand flexibility contributions.