The PJM Interconnection will hold a one-time reliability backstop auction for new capacity from Sept. 30 to Oct. 21 to fill a 6.8-GW shortfall from the grid operator’s last base capacity auction, under a proposal filed at the Federal Energy Regulatory Commission on Friday.
In PJM’s last capacity auction, for the delivery year that starts in mid-2028, the grid operator failed to secure enough capacity to meet its 20% reserve margin target, a level of capacity that aims to ensure that PJM has no more than one unexpected power outage every 10 years.
The shortfall was largely driven by growing data center load forecasts and a lack of matching new power supplies. PJM estimates that data center and other large load demand could grow by up to 70 GW by 2038.
In PJM’s two-part plan, the grid operator is also facilitating a process for data centers and power suppliers to reach bilateral deals. The backstop auction’s capacity target could be reduced if bilateral contracts are reached before the auction.
Through the auction, PJM will pay up to $20 billion for new power plants to help supply data centers built through 2027, the Natural Resources Defense Council said on Friday.
The backstop auction’s costs will be allocated to PJM zones based on their pro rata share of the procurement target and then allocated to utilities and other load-serving entities within the zones, according to PJM. The grid operator proposed a $555/MW-day overall price cap for the auction, up from a $325/MW-day cap for its last base capacity auction.
The success of the plan depends on states taking steps to protect their retail customers from cost shifts, according to PJM.
“The RBP framework relies on each of the PJM states to refine, for purposes of cost allocation, which retail loads — including which ‘large loads,’ as each state defines such loads — should be allocated the costs of resources procured through the RBP,” PJM said in the filing at FERC.
PJM aims to announce the backstop auction results by Dec. 2, before it holds a base capacity auction for the 2029/30 delivery year.
Separately, PJM plans to file a proposal at FERC on Aug. 7 that would allow the grid operator to curtail large loads that don’t have their own power supplies when PJM gets close to grid emergencies, according to Jeffrey Shields, a PJM spokesman. The rules would affect data centers that come online after June 1, 2027.
Under the Interim Resource Adequacy Service proposal, previously called “connect and manage,” PJM will create a registry of all large loads, which “will provide the critical data transparency needed to establish load reduction priorities for retail customers,” the grid operator said in its latest summary of the plan.
“Requiring future data centers to bring their own power might be the single best thing they could have done to stabilize the grid,” Tom Rutigliano, NRDC senior advocate for Climate & Energy, said in a press release. “Now PJM needs to finish the job by supporting state efforts to manage demand from existing data centers, enabling rapid deployment of energy storage, and accelerating the connection of new energy projects to the grid.”
