PA Environment Digest Blog: PJM Interconnection Opens Next Electric Capacity Auction Bidding Window Of July 9 to 15 For 2026-27 Electric Delivery; Hold Your Breath!

On July 9, the PJM Interconnection announced it has opened the next electricity capacity auction bidding window of July 9 to 15 that will help determine electric prices throughout its 13 state and District of Columbia footprint that includes Pennsylvania.

The auction is to procure electric generating capacity for the June 2026 to May 2027 delivery year.

The results will be reported on July 22 after 4:00 p.m. Eastern.

Click Here for the PJM announcement.

What Can We Expect?

John Quigley, Senior Fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania, said, “I think we should brace ourselves for continued high energy prices and more cost increases.

“PJM remains overly dependent on fossil fueled generation.

“Solar and battery storage today are still well under 10% of generation system-wide, and the clean energy interconnection backlog persists.

“On top of that, the recently passed Federal reconciliation bill alone will raise Pennsylvania electricity costs by a projected 8% over the next four years and will intentionally constrain renewable generation growth and boost the most expensive generation of all - coal.

“Unconstrained LNG exports will raise domestic natural gas prices by at least 30% by 2050, further increasing electricity costs.

“Plus, there's a backlog on new gas turbines that stretches well into the 2030's, and tariffs will make all construction more expensive.

“So, electricity prices are going nowhere but up.”

Changes From July 2024 Auction

PJM's last capacity auction in July 2024 produced a capacity price of $269.92/MW-day for delivery in 2025-26, a 933% increase over the $28.92 MW-day cost for delivery in the 2024-25 auction. Read more here.

The biggest change in the auction process since then was as a result of a lawsuit by Gov. Shapiro against PJM which resulted in putting a new floor and cap on electricity bids that can be accepted by PJM. Read more here.

Utility Dive reported the Federal Energy Regulatory Commission approved a price cap of $325/MW-day and a floor of $175/MW-day in the settlement.

PJM Fast Tracked Power Projects

In May, the PJM Interconnection released the list of 51 power projects it has selected with hopes to bring online by 2030 to provide more than 9,300 MW of reliable capacity through the Reliability Resource Initiative. Read more here.

PJM choose 22 projects generating 5,095 MW in Virginia; 9 projects generating 3,363 MW in Ohio; 7 projects generating 1,201 MW in Pennsylvania; 5 projects generating 550 MW in New Jersey; 4 projects in Illinois generating 398 MW; 2 projects in Maryland generating 554 MW; 1 project in Kentucky generating 786 MW and 1 project in West Virginia. Read more here.

New PA Data Center Demand

Demand for electricity has increased since July 2024 as a result of new A.I. and data center announcements.

On July 9, Reuters reported the PJM electric grid is “under strain as data centers and A.I. chatbots consume power faster than new plants can be built.” Read more here.

On July 7, the US Department of Energy released a report on grid reliability saying the growth of electric generation is not keeping up with demand and that generation must match the needs of A.I. data center demands. Read more here.

Seven major announcements by Amazon, Homer City Redevelopment, Liberty Energy, TECfusions, Constellation Energy, Rich Pike LLC and KDI Wyalusing Power LLC in the last few months highlight A.I. demand in Pennsylvania.

Amazon said it will invest $20 billion in data center development in Pennsylvania, starting in Bucks and Luzerne counties. Read more here.

As part of that deal, Talen Energy agreed to sell Amazon 1.9 GW of power from the Susquehanna Nuclear Plant in Luzerne County for its exclusive use that would otherwise be going onto the grid. Read more here.

The 3,200 acre former Homer City coal-fired power plant campus is being converte to a data center complex powered by a new 4.4 GW natural gas-fired power plant in Indiana County. Read more here.

The developers said 25% of the power generated at the site may be turned back to the electric grid for use by “ordinary people.” Read more here.

TECfusions announced the acquisition of 1,395 acres in Upper Burrell, Westmoreland County for a data center project, known as TECfusions Keystone Connect. The project will transform the shuttered office and industrial site into a state-of-the-art data center campus, with plans for 3 gigawatts of natural gas-fired power generation capacity to be deployed over six years. Read more here.

Liberty Energy Inc., Imperial Land Corporation and Range Resources – Appalachia, LLC announced a strategic alliance to support the development of a state-of-the-art power generation facility of up to 1 GW in size within the Fort Cherry Development District in Robinson Township, Washington County. Read more here.

Rich Pike LLC announced plans to build 30+ data centers in Clifton and Covington Townships, Lackawanna County pulling 1.5 GW of power from local PPL power lines. Read more here.

The KDI Wyalusing Power LLC has applied for an Air Quality Permit for a 218 MW natural gas-fired power plant dedicated to only providing power to a data center with an unknown owner in Wyalusing Township, Bradford County on a site originally proposed for an LNG gas processing plant. Read more here.

And the deal that kicked things off-- the Constellation Energy restart of the Three Mile Island Nuclear Power Plant to feed Microsoft data centers-- recently said it will start generating power by 2027, earlier than anticipated. Read more here.

Power Plant Purchases

The sale of other individual power plants in Pennsylvania intended for the use or hoping for the use of those A.I. and data centers is also taking electric generation away from the grid and “ordinary” users and being reserved for particular customers.

The Associated Press reported-- “Looking for a quick fix for their fast-growing electricity diets, tech giants are increasingly looking to strike deals with power plant owners to plug in directly, avoiding a potentially longer and more expensive process of hooking into a fraying electric grid that serves everyone else.”

Vistra Corp announced it will acquire 2.6 GW natural gas-fired power plants, including two plants in Pennsylvania totalling 1,478 MW of capacity with the intent, in part, of meeting data center demand. Read more here.

NRG is purchasing the LS Power 2.4 GW generating portfolio, including five natural gas power plants in Pennsylvania with 2,436 MW of capacity. NRG said the peaking plants in the mix may be converted to baseload plants, again with the intent to feed data centers. Read more here.

The Canadian firm Bifarms Ltd is buying Stronghold Digital Mining and the Scrubgrass and Panther Creek coal waste power plants which were already dedicated for cryptocurrency operations, as are other coal waste plants. Read more here.

Dependent On One Fuel

The Independent Fiscal Office issued its latest Pennsylvania Electricity update that reports the electricity grid is dependent on one fuel for 59% of the state’s electricity generation-- natural gas-- followed by nuclear power-- 31.9%, coal-- 5.4% and 3.7% from other sources. Read more here.

The price of natural gas-generated electricity is subject to the whims of international natural gas prices, as Russia’s war in Ukraine very clearly demonstrates.

The increase in LNG gas exports is also linking domestic natural gas prices more firmly to international markets LNG is sold into, raising electric bills and gas prices here at home. Read more here.

The North American Electric Reliability Corp. pointed out again last winter, natural gas generation is threatened by ongoing concerns about extreme weather events impacting production and delivery. Read more here.

What About ‘Ordinary People’?

On May 12, PA Senate and House Committees held hearings on how the rapid increase in demand for electricity to power data centers filled with computers is impacting the price and availability of electricity for “ordinary people” on the regional electric grid operated by the PJM Interconnection. Read more here.

Jason Staneck, Executive Director for Governmental Services at PJM, told the committees the unprecedented increases in demand for electricity they are seeing-- “It’s not people.”

“Number one head and shoulders above any other customer is data centers. So it's for everything from bitcoin mining, to generative artificial intelligence, to cloud computing, to just maintaining the consumption of all the devices, the average household now has 21 connected devices.”

“And we see that everywhere, it's become a global arms race for A.I.”

Rep. Danilo Burgos (D-Philadelphia), Majority Chair of the House Consumer Protection, Technology & Utilities Committee, said-- "You stated [PJM] that people aren't the problem, but yet somehow people continue to carry the load of the payments.

“Our communities like mine and Rep. Ryncavage and across Pennsylvania are going to be hurt with this increase of demand in the future, and I hope that the PJM will consider-- reconsider the way they allow projects to come online.

“Being as though what you stated that either it was lack of financing, or what other excuses that private entities came up with [for not bringing new electric generation online], hopefully will not happen in the future because our communities cannot afford it.”

Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee, shared his concerns about the impact on “ordinary people.”

“One of the issues that we've talked about is, I want to encourage generation capacity here, but I also want to serve the ordinary people, like everybody here.

“A.I. and data centers are great. I encourage them if we can find a way that they... and what they seem to be doing now is, they're enhancing their own power, so that they have a reliable source, they do it themselves.

“If we have some incentive for generation to come here, I want to make sure that generation goes to the, I can't think of a better word saying other than to say the ordinary people, the residential customers, and that they, quite honestly, can't take advantage of some incentive to come here and build for the limited use of an A.I. center.

“We're looking at that, and we're concerned about that.”

Click Here to read more.

Stay Tuned!

On July 22 after 4:00 p.m. Eastern, we should learn how all these issues will impact the new PJM electricity capacity auction.

Resource Links - PA Electric Grid:

-- Rise Of The Machines: PA Senate, House Members Express Concern That Demand For Power To Run Computers Is Impacting The Price And Availability Of Electricity For ‘Ordinary People’ [PaEN]

-- House Committee Told PA Needs An Energy Policy, Doing Nothing Means We Are Going To Run Out Of Power; Overreliance On One Fuel-- Gas-- Is Raising Electricity Prices [PaEN]

-- Gov. Shapiro Announces Amazon Plans To Invest $20 Billion In Pennsylvania For A.I. Data Center Infrastructure; Amazon Told PUC It Has Net-Zero Carbon Emissions Goal By 2040 [PaEN]

-- Spotlight PA: Costs Of Amazon’s $20 Billion Promise To Build Data Centers In PA Unknown: Impact On Electricity Supply, Power Costs To Consumers, Tax Revenue Forfeit

-- DEP Invites Comments On Air Quality Permit For 72 - 2.5 MW Diesel-Fired Emergency Generators At New Amazon Data Services Center In Bucks County [PaEN]

-- PA Elected Officials, Consumer, Clean Energy Advocates Demand Electric Grid Operator PJM Act To Hold Down Electricity Costs [PaEN]

-- PUC Urges Electricity Customers To Start Shopping, Conserve Energy To Help Avoid Impact Of June 1 Rate Increases Of Between 5% and 16% On Most Electric Bills [PaEN]