The price that grid operator PJM Interconnection will pay power generators to assure they’re available when needed has soared a stunning eightfold, as the balance between rising demand and diminishing supplies worsens from Chicago to the Atlantic Coast.
The bottom line: Coal and natural gas generation is shutting down too quickly and new wind and solar projects can’t get approved fast enough inside PJM, the power market and transmission operator serving 65 million people in a 13-state region.
PJM said Tuesday that based on bids from generators, it will pay plant owners a daily price of $269.92 per megawatt in the 2025-2026 delivery year to commit to be in operation during specific times beginning next June. Analysts say that should send a clear price signal to electricity companies to build more generation.
The sharp rise in demand from data centers supporting a growing digital economy is fueling concerns about electric reliability. That power demand is coming on as more money and regulatory muscle get behind a transition to zero-carbon technology to replace aging fossil fuel plants.
