Data center load growth is the primary reason for recent and expected capacity market conditions in the PJM Interconnection, including total forecast load growth, the tight supply and demand balance, and high prices, PJM’s market monitor said in a recent report.
“But for data center growth, both actual and forecast, the PJM Capacity Market would not have seen the tight supply demand conditions, the high prices observed in the BRA for 2025/2026 or the high prices expected for the 2026/2027 and subsequent capacity auctions,” the IMM said in the June 3 report.
“It is misleading to assert that the capacity market results are simply just a reflection of supply and demand. The current conditions are not the result of organic load growth. The current conditions in the capacity market are almost entirely the result of large load additions from data centers, both actual historical and forecast,” the report said.
The growth in data center load and the expected future growth in data center load “are unique and unprecedented and uncertain and require a different approach than simply asserting that it is just supply and demand.”
The level of data center demand projected in the 2024 load forecast from new data centers and growth from existing data centers (growth above embedded) that were used for the 2025/2026 BRA, had a very significant impact on capacity market conditions, illustrated by the prices in the 2025/2026 BRA, the IMM said.
The expected level of data center demand included in the 2025 PJM load forecast is expected to have a very significant impact on capacity market conditions and prices in the capacity market for the 2026/2027 and subsequent BRAs, the IMM said.
If the IMM’s recommendation to require new data center load to bring their own new generation were adopted, “the impact of the uncertain forecast of data center load on other customers would be limited or eliminated, although the impact of embedded data center load would remain, and the slower underlying dynamic of organic load growth and incentives would play out,” the IMM said.
The report, Part G of what will be a comprehensive report, prepared by the IMM, presents a seventh set of sensitivity analyses of the nineteenth Reliability Pricing Model Base Residual Auction (BRA) for the 2025/2026 Delivery Year which was held from July 17 to 23, 2024.
The sensitivities in Part G are focused on the substantial recent increase in actual load and the increase in the peak load forecast for 2025/2026 BRA and 2026/2027 BRA that were almost entirely due to existing and projected data center load additions to the PJM grid.
The IMM presented the results of these sensitivities in order to provide information to stakeholders that is relevant to decision making about the 2026/2027 BRA, now scheduled for July 9 to 15, 2025, and the design of future auctions. The results reported by the IMM are not forecasts or predictions of the outcome of the 2026/2027 BRA.
