PJM Opens Sweeping Review of Its Capacity Market as Reliability Strains Grow

Overview

• PJM, which released a 70‑page white paper Wednesday, launched a formal stakeholder process to rethink its capacity market, the program that pays power plants to be available during peak demand.
• The paper outlines three paths that range from longer‑term purchase commitments to a model that curtails some large new loads first to a shift toward recovering more revenue through energy sales with longer contracts.
• PJM says demand is rising fast from AI and cloud data centers and broader electrification as older plants retire and new projects face long permitting and supply delays, with only 23 gigawatts connected out of a once 300‑gigawatt‑plus interconnection queue.
• Leaders warn price spikes have strained the shared reliability compact, and following last year’s record auction, federal regulators extended capacity price limits through 2030 as Gov. Josh Shapiro and other state officials pressed for consumer protections.
• American Electric Power signaled it may exit PJM over slow interconnections and market friction, and PJM’s CEO said the window to act is short, with any path likely to affect who gets curtailed during scarcity and how consumers see price stability.