PJM power hits the cap again as data centers add $6.2B

The largest US grid operator has published the number that now sits at the top of every data center pro forma: PJM Interconnection’s capacity auction for the 2028/2029 delivery year cleared Tuesday at $325 per megawatt-day, the FERC-approved cap, and still came up 6,831 megawatts short of what the grid says it needs to stay reliable.

Why it matters

This is the price signal that settles the argument about what gates a data center site. It is not dirt and it is not zoning. PJM ran an auction across 13 states and Washington, D.C., paid the maximum price the rules allow, and could not buy enough supply. For a developer, the practical translation is that a site’s value now tracks its power position, and that the cost of that power is being set at an administrative ceiling rather than by the market, which means the posted number understates the true scarcity. It also changes the political weather. When the capacity bill lands on residential ratepayers in Pennsylvania, New Jersey, Ohio and Virginia, the backlash follows the load, which is exactly the sequence that produced New York’s statewide moratorium on large data centers this week. Underwrite the siting fight, not just the interconnection queue.

The numbers

PJM procured 138,318 megawatts of unforced capacity, up 3,733 MW from the prior auction, with another 10,864 MW committed under fixed resource requirements. The clearing price of $325/MW-day is 2.5% below the 2027/2028 cap of $333.44, but only because both auctions were pinned to the ceiling. Cleared supply times the clearing price totals $16.4 billion. Reserve margin: 14.7%. The attribution comes from the grid’s independent market monitor, Monitoring Analytics, which found that in the 2027/2028 auction, total revenues of $16.4 billion would have been $10.2 billion had forecast data center load been left out of the peak load forecast, an increase of $6.24 billion, or 61.4%. Across the last three auctions, the monitor puts the added cost to other PJM customers at $23.1 billion. Had that auction run on an unrestricted demand curve, without the price cap, the monitor calculates total revenues of $26.3 billion.

What’s next

The cap has been extended through the December auction covering 2030 and 2031, so expect the posted price to stay flat while the shortfall does the talking. The monitor has recommended requiring new data center load to bring its own generation, a rule change that would reprice powered land overnight and that private capital is already front-running through behind-the-meter gas. Track the beat at our data centers hub and the national market.