Delmarva Power and other Mid-Atlantic region utilities will pay more for “capacity price” back-up electricity than their counterparts elsewhere in the territory of regional transmission operator PJM. However, prices coming out of a recent auction were considerably lower than in the previous round.
The difference in the capacity price from a recent auction is due to “constraints on the transmission system, resulting in congestion,” a PJM spokesman stated. The auction is expected to add to cost pressures on coal-fired power plants that have been coming in with higher costs natural gas-fueled generators.
More recently, PJM recommended Delaware’s last coal-fired powerplant in Sussex County remain in operation while the grid is strengthened in preparation for its closing. Plant operator NRG had the looming shutdown after other auction prices came in below its costs. The plant will be subsidized as grid improvements are made.
Despite rising inflation prices during the 2023/2024 Delivery Year in PJM’s territory were lower than in the previous auction for the previous delivery year. As a result, sufficient resources plus reserve levels were procured at a cost of $2.2 billion, compared with approximately $4 billion for the current delivery year, PJM noted.
This was also true in the Delmarva region where the auction price was considerably lower than the figure from the previous auction, Utility Dive reported.
2023/2024 Capacity Prices
| Delivery Area | Capacity Price | Transmission Zone Affected |
| RTO | $34.13 | |
| MAAC | $49.49 | Atlantic City Electric, Delmarva Power North (north of the Chesapeake & Delaware Canal), Jersey Central Power & Light, Met-Ed, PECO, Penelec, Pepco, PPL, PSE&G and Rockland Electric |
| BGE | $69.95 | Baltimore Gas & Electric |
| DPL-South | $69.95 | Delmarva Power South (south of Chesapeake & Delaware Canal) |
Those resources clearing the auction include more than 5,300 additional megawatts of nuclear generation than were cleared in the prior auction.
“PJM’s capacity market continues to support the reliability of the electric grid in a competitive manner,” said CEO Manu Asthana. “In combination with our other markets, the capacity market remains a central component in attracting a diverse, reliable, and competitive resource mix to meet forecasted system demand.”
The PJM capacity auction, called the Base Residual Auction, locks down power supply resources in advance of the delivery year to meet electricity needs in the PJM service area, which includes all or part of 13 states and the District of Columbia.
Auctions are usually held three years in advance of the delivery year. The 2023/2024 auction was originally scheduled to be held in May 2020, but auctions had been suspended while federal regulators considered approval of new capacity market rules.
“PJM’s capacity market is designed to reflect where supply and demand meet, and these auction results show that,” said Stu Bresler, senior vice president – Market Services. “We look forward to working with our stakeholders and the states we serve to continue refining our markets to meet the needs of an evolving grid and ensure the reliable flow of power well into the future.”
This year’s auction procured 144,871 MW of resources for the period of June 1, 2023, through May 31, 2024. The total Fixed Resource Requirement (FRR) obligation is an additional 31,346 MW.
PJM’s auction saw a growth of more than 5,000 cleared megawatts (MW) of carbon-free resources, led by an increase of 5,315 megawatts from existing nuclear units that did not clear in the previous auction. Nuclear plants have been getting subsidies to keep costs competitive with natural gas.
Solar resources increased 25%, from 1,512 MW to 1,868 MW, while the number of wind resources clearing was down 434 MW to 1,294 MW. The decrease in wind resources clearing the auction reflected a decrease of wind resources offered into the auction.
Natural gas resources clearing the auction increased by 1,685 MW, with more efficient combined-cycle units clearing 3,627 more megawatts than the last auction and combustion-turbine units down 1,012 MW. Combined-cycle units cleared a total of 48,030 MW in the auction and combustion-turbine units 19,080 MW.
Cleared capacity of steam units (primarily coal) declined 7,186 MW to 27,682 MW, tracking with a decrease of 7,813 MW offered into the auction as a result of coal plant closings.
A 660 MW increase in Energy Efficiency resources, to 5,471 MW, was offset by a 716 MW decrease in Demand Response to 8,096 MW.
The total procured capacity in the auction represents a 20.3% reserve margin, compared to a 14.8% required reserve for the 2023/2024 delivery year.
A detailed report of the results is available on PJM’s capacity market web page.
