Albireo Energy PLUGGED IN is a news channel for our energy analysis and procurement customers, providing a monthly view into energy markets. We highlight key trends, pricing dynamics, and procurement insights to help you stay informed and make smarter energy decisions.
PJM 2028/2029 Auction Results Announced
PJM announced the results of its capacity auction for the 2028/2029 season on July 14th. The auction once again hit the FERC approved cap. The cap this season was set at $325/MW-day, which represents a 2.5% reduction from the 2027/2028 season cap of $333.44/MW-day. Unfortunately, for the second straight auction, it fell short of the reserve margin. This fact highlights that supply is still running to catch raising demand.
Source | NOAA Seasonal Temperature Outlook
One of the functions of the capacity auction is to entice new generation to be created. However, as can be seen in the graph below, a declining amount of new generation is being brought to the auction over the last 3 auctions. This fact has received the attention from many stakeholders including FERC. FERC is weighing to become more involved in PJM matters and has given PJM until September to propose governance changes.
Source | NOAA: El Nino forms, expected to strengthen, say NOAA forecasters
Details Announced for Backstop Auction in PJM
PJM announced that it will hold a Reliability Backstop Procurement for the 6,831 MW shortfall from the 2028/2029 capacity auction on September 30, 2026, and closing on October 21st. The results will be released in December. It is labeled a “one-time” procurement, but since the procurement only addresses the recent shortfall, it is unclear whether additional future procurements will be necessary.
There are a number of different rules that will govern this procurement from regular auctions. For example, the cap for this auction will be set at $555/MW-day which is far above the most recent $325/MW-day, but more in line with estimates of where recent auctions would have cleared without a cap. Resources available to participate will also be different including the need to commit to a 15-year term. Read details from PJM here.
Who will be responsible for paying for the results of the procurement is an open question. Stakeholders are aware that much of the demand that is driving the need for additional supply is coming from computational loads like data centers, in particular, new data center load coming online after June 1, 2027. However, since PJM has no jurisdiction to allocate the costs directly to them, it will be left to states and local utilities to development a method for passing the costs along.
Multiple Publications Forecast an Upcoming Electricity Shortfall
Bloomberg and Bank of America (BofA) both recently published reports which call for an electricity shortfall in as soon as five years. Data centers are primary force fueling demand for electricity. Bloomberg predicts that data centers will account for 20% of all electric usage by 2035, up from its current level of 5.9%. Bloomberg also forecasted that data centers will need 194 GW of new generation by 2035. That forecast nearly doubled its 106 GW forecast it made in December 2025. The record for data center capacity brought in a single year is 7.1 GW. Bloomberg noted that If that amount is replicated every year, there would still be a 19 GW shortfall by 2035. Read the report here.
For its part, Bank of America forecasts that the US will need to generate an additional 230 GW of electric supply by 2030 while reporting that there is only 93 GW of accredited supply currently planned. There is an additional 67.5 GW planned for behind the meter construction. That leaves a gap of 69.5 GW to be found. Adding to the dilemma is that large gas turbines are basically sold out through 2030.
Day-Ahead Ancillary Services Refinements in ISO New England
ISO-NE made some refinements to its Day-Ahead Ancillary Service market back in May. Now, ISO-NE is requesting another round of refinements to take effect on October 22, 2026. ISO-NE introduced its new ancillary service market in March of 2025. In its first year of operation, the costs far exceeded original estimates. ISO-NE estimates that adding the new ancillary market has increased market cost by $974 million in the first year compared to initial estimates of $140 million (Read more from ISO-NE here). 50% of the costs occurred over 12 days, including 5 consecutive days during Winter Storm Fern.
ISO-NE has not been happy with the participation in the market, so these additional refinements are meant to increase participation with an eye towards lowering the ancillary costs. The forecasted energy requirement will be lowered to better reflect contributions from wind and solar resources, which means that demand will be lowered. Additionally, ISO-NE is requesting a price floor to be put in place. It believes that times when pricing has dropped too low have caused entrants to not participate. Therefore, the hope is that with a floor the supply into the market will increase and thus bring down the overall average price.
Market Update
Natural gas continues to move lower, but electricity pricing has stayed elevated. Continued unease about the tightening supply and demand, especially in the short-term has kept prices higher. Fears of a repeat of last winter is also contributing.
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