Vienna, VA – July 25, 2025 — Energy Ventures Analysis (EVA) has released its comprehensive report analyzing the results of PJM Interconnection’s 2026/27 Base Residual Auction (BRA), which cleared at the Federal Energy Regulatory Commission (FERC)-imposed cap of $329.17 per megawatt-day (MW-day) across the entire Regional Transmission Organization (RTO) footprint. This marks a 22% jump over the previous auction, where the 2025/26 BRA cleared at $269.92/MW-day for the RTO. PJM’s simulation indicated that, absent the regulatory cap, the clearing price would have reached $388.57/MW-day, an even more dramatic reflection of system scarcity.
Impact Of Changes To PJM Capacity Market Pre-2026/27 BRA
Several factors contributed to this outcome, including a 3.5% increase in forecast peak load, spurred by accelerating electrification and continued data center growth. In response to recent extreme weather and reliability risks, PJM also raised the Installed Reserve Margin (IRM) from 17.8% to 19.1%. Meanwhile, updated capacity accreditation under the Effective Load-Carrying Capability (ELCC) methodology resulted in downward adjustments for key resources, especially natural gas, battery storage, and solar.
As a result of these dynamics, the 2026/27 BRA cleared 134.2 GW of Unforced Capacity (UCAP) with minimal supply margin—less than 1 GW of offered capacity did not clear. Notably, no zones within PJM experienced localized price separation, with all Locational Deliverability Areas (LDAs) clearing at the same cap price. The total capacity cost for the 2026/27 delivery year is estimated at over $16.1 billion.
Key Findings:
Tight Supply-Demand Balance:
- PJM continues to operate with narrowing reserve margins, as nearly all available capacity cleared the auction. The system reserve margin fell just short of the new 19.1% IRM target, underscoring the market’s tightness. This dynamic reflects both increasing reliability requirements and a slow pace of new resource entry.
Shifts in Resource Mix:
- Coal and wind resources saw modest increases in cleared capacity, with coal partially supported by Reliability Must-Run (RMR) designations. Meanwhile, cleared natural gas capacity declined by 3.0 GW year-over-year, reflecting both plant retirements and reduced ELCC values. Solar and storage resources also faced lower accreditation, which constrained their effective capacity contribution.
PJM 2025/26 v/s 2026/27 BRA Auction Cleared MWs By Fuel Type
Limited New Capacity Development:
- Although nearly 1,500 MW of new capacity cleared the auction, this remains well below what is needed to offset the 7,600 MW of capacity already scheduled for retirement through 2029. Most new capacity consisted of renewable resources, with limited entry from firm, dispatchable generation. PJM’s interconnection queue remains heavily skewed toward variable resources, with only a small share of gas-fired capacity in advanced development.
Challenges Ahead:
Looking forward, PJM faces ongoing challenges in maintaining system reliability amid accelerated thermal retirements, a growing dependence on weather-sensitive renewables, and sustained demand growth, particularly from large load centers in Northern Virginia and the Midwest. While over 125 GW of projects remain in PJM’s interconnection queue, only a fraction represent dispatchable capacity with near-term commercial viability. Moreover, the continued delay in holding capacity auctions, now occurring just one year ahead of delivery, limits visibility for developers and weakens investment signals. Without accelerated transmission buildout, reform to the interconnection process, and a clearer path for firm resource development, PJM will likely remain in a constrained and high-cost capacity environment.
The full report can be accessed HERE. If you would like more detailed insights or have any questions, please reach out to us at s[email protected].
About Energy Ventures Analysis: Energy Ventures Analysis (EVA) is a leading provider of consulting and analytical services for the energy industry. With decades of experience, EVA delivers in-depth market analysis, strategic insights, and expert advice to support decision-making in the energy sector.