We are pleased to present our latest policy note covering the PJM Capacity Market. This note provides detail on drivers of the record-high clearing prices from July’s 2025/26 Base Residual Auction. It then dives deep into the upcoming 2026/27 BRA, investigating its parameters, drivers, and expected clearing prices.
The key highlights include the following:
- PJM’s 2025/26 BRA took place in July 2024 and cleared at historically high levels: $270/MW-day for the RTO and MAAC; the auction cap for BGE ($466/MW-day) and Dominion ($444/MW-day). These high prices were driven by high demand, low supply, and PJM’s CIFP reforms.
- For the 2026/27 BRA, taking place in December 2024, Aurora considers the outcome highly uncertain: from $100/MW-day (low case) to $696/MW-day (high case), with ~$250/MW-day a p50 expectation. Key factors impacting this auction include:
- A significantly steeper VRR curve, causing sharply increased price sensitivity and raising outcome uncertainty
- Higher demand (+3 GW UCAP reliability requirement)
- A strong incentive for increased supply, due to (i) expected higher clearing prices and (ii) effectively removed capacity performance penalties in >50% of PJM, due to a $0/MW-day Net CONE
- Through 2030, we expect average p50 clearing prices of $250-300/MW-day for the RTO, $280-350/MW-day for MAAC, and $300-700/MW-day for Dominion.
If you have any questions or would like to learn more about our PJM coverage, please contact Kyndal Mayes.
