The capacity auction of grid operator PJM’s showed signs of tightening electricity supplies, with one Delmarva Power service aera seeing a sharp loss in anticipated supply.
PJM retained a healthy electricity reserve margin, but has seen that figure decline in recent years.
The auction had approximately 2,000 fewer megawatts offered than the previous auction, continuing a three-year trend. If the trend continues, it represents a potential concern, a release from PJM stated. (See report below)
“The capacity auction continues to be our best tool to ensure reliability at competitive prices in PJM,” said CEO Manu Asthana. “The prices we see in certain areas also suggest that supply and demand conditions are tightening in these areas.”
While PJM indicated it could not draw significant conclusions from this single auction, it offers another data point as it looks at trends as more coal-fired power plants are retired. The auction showed more solar power coming online. However, fewer megawatts of coal and nuclear power were made.
The total capacity in the auction and resource commitments represents a 20.4% reserve margin, compared to a 20.3% reserve margin for the 2023/2024 delivery year.
In December, PJM sought revisions for customers in the Delmarva South, after some planned generation with signed interconnection service agreements did not make its way into the auction. This resulted in supply and demand conditions that did not reflect the underlying fundamentals of the system. PJM estimated that customers in this area would have been required to pay more than four times more for capacity for the 2024/2025 Delivery Year, minus revisions that federal regulators approved this month.
Auctions are usually held three years in advance of the delivery year. The 2024/2025 auction was originally scheduled to be held in May 2021, but auctions had been suspended while FERC considered approval of new capacity market rules.
PJM is dealing with a backlog of solar projects for review.
A detailed report of the results is available on PJM’s capacity market web page.
2024/2025 Capacity Prices
|Delivery Area||Capacity Price||Transmission Zone Affected|
|DEOK||$96.24||Duke Energy Ohio and Duke Energy Kentucky|
|MAAC||$49.49||Met-Ed, Penelec, Pepco, PPL|
|Eastern MAAC||$54.95||Atlantic City Electric, Delmarva Power North (north of the Chesapeake & Delaware Canal), Jersey Central Power & Light, PECO, PSE&G, and Rockland Electric|
|DPL-South||$90.64||Delmarva Power south of Chesapeake & Delaware Canal|
|BGE||$73.00||Baltimore Gas and Electric|
PJM also released a report this month that wansed the trend toward tighter supplies lead to reliability issues by 2030. (See below)