The PJM Interconnection has moved ahead with two steps directed by the PJM Board of Managers as part of the larger initiative to address the electricity supply-demand imbalance largely driven by data center growth, it said on March 2.
Two key proposals filed at the Federal Energy Regulatory Commission on Feb. 27 seek approval to extend the existing price collar used in the capacity auctions for two additional delivery years and expedite interconnection studies of new power generation that meet certain requirements.
This extension of the price collar and the establishment of an expedited interconnection track are part of a comprehensive set of reforms to address the resource adequacy challenges resulting from the rapid growth of electricity demand in the region, principally from data centers.
The proposed extension of the price collar will protect both consumers and producers from volatility in the market while PJM completes its other planned reforms, including the upcoming reliability backstop procurement and a holistic review of PJM’s wholesale energy and capacity markets. The expedited interconnection track is designed to speed the path for new, larger generation projects that commit to in-service dates and have support from state siting authorities.
The filings represent part of the multifaceted roadmap to reliably and affordably serve load loads published by the PJM Board in January.
Both proposals were, in principle, supported by a coalition of all 13 PJM state governors, the White House National Energy Dominance Council and the Department of Energy, as detailed in a Statement of Principles released Jan. 16.
Auction Price Collar
The PJM capacity auction is designed to procure and incentivize sufficient power supplies needed for grid stability during peak conditions in a future delivery year at a competitive cost.
The upcoming auctions scheduled to take place in mid- and late-2026 are designed to secure enough supply needed to serve the peak demand forecasted for the 2028/2029 and 2029/2030 delivery years.
For those future delivery years, PJM’s Feb. 27 filing at FERC would extend the existing price cap of approximately $325/MW-day and the price floor of approximately $175/MW-day to provide stable market outcomes in the near term. If approved, the changes would narrow auction outcomes, lowering the price cap for the upcoming 2028/2029 Delivery Year auction from $550/MW-day and adjusting upward the zero-dollar price floor.
This proposed price collar was previously accepted by the Federal Energy Regulatory Commission to be applied to RPM Auctions associated with the 2026/2027 and 2027/2028 delivery years.
Before directing PJM to seek permission from the Federal Energy Regulatory Commission to extend the price collar for two additional delivery years, the independent PJM Board received hundreds of comments from stakeholders and the public.
The PJM proposal filed Friday seeks FERC acceptance by April 28 to conduct the next auction scheduled June 30 without delay.
Expedited Interconnection Track
Also on Feb. 27, PJM filed its Expedited Interconnection Track (EIT) proposal.
This plan provides an alternate path for advanced projects of significant size to get connected quickly to address PJM’s urgent need for additional capacity resources.
To be eligible, a project would:
• Offer at least 250 MW of accredited unforced capacity (UCAP).
• Be supported by a commitment from its primary siting authority.
• Achieve commercial operation within three years.
• Waive the opportunity for a one-year extension of milestones for any reason.
• Demonstrate 100% site control for related facilities at the time of application.
• Involve a new generation facility or increased capacity at an existing resource; projects currently being studied under PJM’s new Cycle process would not be eligible.
Any fuel source or technology would be able to submit an application subject to these requirements. The projects would be studied on a serial basis in the order they were received.
PJM would choose no more than 10 projects per calendar year over the next two years. The study process is projected to take about 10 months.
The developer would submit a $500,000 study deposit that would become nonrefundable once an EIT request was complete and valid. In addition, participation would require a Readiness Deposit of $15,000 per megawatt that would be refundable once the project achieved commercial operation.
Generation Project Developers would be responsible for 100% of necessary network upgrades to connect.
The EIT is designed to minimize adverse impacts on PJM’s Cycle process.
PJM requests FERC accept the filing by May 28, with a July 31 effective date.
"Further efforts directed by the Board remain the focus of intensive deliberation among PJM Members and stakeholders as they address longer-term solutions to issues of insufficient power supplies, affordability and grid reliability in the face of extraordinary demand," PJM said.
The price collar and interconnection process proposals help reduce market volatility, preserve affordability and streamline new supply amid the larger body of work that includes the following:
• Development of a Backstop Reliability Procurement mechanism to be implemented later this year. As directed by the Board, PJM states and the White House, this one-time procurement would secure power supplies needed in the future and be paid for by large loads to mitigate capacity auction shortfalls. Recent auction results for the 2027/2028 Delivery Year cleared enough resources to meet future need while falling 5.6% – or 6,600 MW – short of the Installed Reserve Margin target. This shortfall detailed in a subsequent PJM analysis (PDF) triggered a provision in the PJM Tariff to explore such backstop procurement.
• Stakeholder process work to develop “connect-and-manage” approaches. These would facilitate the addition of large loads onto the grid while updating procedures to curtail load if required by peak system conditions. Under this framework, data center growth that does not bring new associated power supplies to the grid may be subject to curtailment prior to the deployment of pre-emergency Demand Response.
• A holistic review of the current wholesale energy and capacity market design – including potential changes to that design – so that PJM’s markets continue to meet the needs of both customers and investors.
