PJM Capacity Auction Results: More Reliability, Lower Prices


PJM recently completed its auction for electric capacity resources for the 2020/21 delivery year. PJM’s capacity auctions procure, and pay for, future electric resources to ensure the grid can meet power needs on peak days. This was the first auction in which PJM procured 100% “Capacity Performance” resources, a program intended to improve power plant performance and grid reliability in the wake of the “Polar Vortex” several years ago. Prices for capacity dropped from about $100/MW-day to $76.53/MW-day. Even with dropping prices and higher performance standards, PJM’s reserve margin – the amount of extra electric generating capacity available at peak times – rose to 23.3%. Duke Energy Ohio customers will see a slight increase in capacity prices in 2020/21, though, to $130/MW-day. This higher, local capacity auction price is meant to create an incentive for building new power plants and transmission lines, or load reduction. A similar price increase in FirstEnergy territory in previous years attracted new resources and prices eventually subsided. The capacity auction had a slight increase in energy efficiency resources, including increases from all four Ohio investor-owned utilities, though there were fewer demand response resources bid in.  5/30/2017