PJM Auction Sets 10-Year Low for Generation Prices

PJM — the grid operator whose service area includes Ohio — has issued the results of its Base Residual Auction (BRA) for capacity for the 2023/24 delivery year. Auctions are usually held annually, three years in advance; however, the BRA had been delayed while the Federal Energy Regulatory Commission created new rules to discourage state subsidies from influencing competitive market pricing. Thus, the 2023/24 BRA is the second auction to take place under a compressed timeline.

This spring’s auction featured a paired down and less restrictive Minimum Offer Price Rule, which had been introduced in the previous BRA. The resulting capacity price is $34/MW-day — the lowest capacity price in ten years. Nuclear, solar, combined-cycle natural gas, and energy efficiency resources all cleared more megawatts in this auction, while demand response, wind, and hydro all decreased. Steam units (primarily coal) saw a steep decline of 7,186 MW, about a 20% decrease. The BRA procured a 20.3% reserve margin, far exceeding PJM’s reliability target of 14.8%. 6/23/2022