We are pleased to present our latest policy note covering the PJM Capacity Market. This note, typically reserved for subscribers, provides analysis on ongoing reforms and expected impact on BRA outcomes in the short term.
Highlights include:
- PJM’s 2025/26 Base Residual Auction (BRA) cleared at near-historically high levels in July 2024. This result prompted a backlash about impacts on electricity bills and several FERC complaints regarding the reasonableness of PJM’s capacity market construct. In response, PJM filed reforms aimed at lowering the capacity price cap and increasing capacity supply.
- PJM proposed and FERC approved a change in parameters of the VRR demand curve, lowering the price cap. A further reform (pending at FERC), negotiated with PA governor Josh Shapiro, would impose a price cap and price floor for the 2026/27 and 2027/28 auctions.
- PJM will consider Reliability Must-Run (RMR) units as capacity suppliers starting with the 2026/27 BRA, and extended the capacity market “must-offer” obligation to the previously exempt intermittent and storage resource classes.
- Beyond the next auction, continued peak load growth will quickly outpace net new capacity, likely leading to shortfalls as early as the 2027/28 BRA without further intervention. Further reforms are likely, with stakeholder processes aimed at modifying the capacity market demand curve and ELCC accreditation already underway.
If you have any questions or would like to learn more about our PJM coverage or our long-term forecast, please contact Kyndal Mayes.
