Second consecutive year of high capacity auction prices highlights urgent need to fix interconnection delays and accelerate clean energy projects
WASHINGTON, DC —The latest PJM capacity auction results make clear, for the second year running, that the PJM region desperately needs new generation, storage, and demand-side resources to meet growing electricity demand. But despite strong “build” signals from high prices, critical barriers are blocking projects from moving forward. Prices have once again increased in PJM, going up for most customers from $269.92/MW-day during the previous auction to $329.17/MW-day today, even though consumers were protected from an even more significant increase by the newly implemented price cap.
“When prices go up, it’s meant to send a signal to energy developers: ‘We need more supply.’ But at the same time PJM is holding up a big red STOP sign to energy developers,” said Jon Gordon, Policy Director at Advanced Energy United. “The biggest problem is PJM’s interconnection queue is closed and has been closed for three years. With the queue closed, new energy projects in the region can’t get in line to connect to the transmission grid, meaning households and businesses are paying for a price signal that the market can’t even respond to."
While PJM transitions to what will hopefully be a faster interconnection process, and makes tweaks to market rules intended to lower prices, demand continues to outpace supply — and the recent rollback of federal clean energy tax credits only underscores the urgency of building new projects now to fully realize available incentives. PJM has been studying projects as part of a transition to a new interconnection process, but does not expect to reopen the queue before 2026.
“Many projects have been stuck in the closed queue for over six years, a significant delay that adds additional risk and cost for developers and is likely to contribute to some otherwise viable projects never getting built,” added Gordon. “Given the magnitude of this crisis, PJM, transmission owners, project developers, and states need to do everything they can to move projects in the current interconnection process through to completion while finding additional ways to accelerate the interconnection process immediately. The high auction prices underscore the urgency of allowing project developers to begin to propose new projects for the queue that reflect today’s economic realities and come on-line in time to lower prices and ensure resource adequacy.”
In addition to doubling down on a faster interconnection process, to meet these challenges, PJM and state leaders need to:
- unlock new capacity quickly by accelerating load flexibility and virtual power plants
- utilize fair interconnection fast-tracks
- deploy advanced transmission technologies.
Advanced Energy United continues to advocate for reforms that ensure the region’s power system meets growing demand without driving up costs for consumers.
Additional resources:
- Some PJM consumers have already seen up to a 20% increase in energy bills due to last year’s auction results, and sustained high prices mean those costs could continue to rise.
- PJM earned a D- on Advanced Energy United’s 2024 Generator Interconnection Scorecard for poor queue management, lack of transparency, and rigid policies that delay projects and increase costs.
- Consumer costs in the last auction could have been reduced by as much as $7 billion if PJM had employed proactive transmission planning and simplified interconnection process, found the report: 2025 Penny-Wise and Pound Foolish: PJM's Capacity Auction Demonstrates the Cost Imperative of Simplified and Speedy Interconnection Report.