PJM Capacity Auction Results As Bad As Feared, Portending a Grim Future For Customers

The energy landscape is transforming rapidly, with remarkable developments across multiple sectors reshaping how we generate, distribute, and consume power. 

Oregon leads the charge in grid modernization with groundbreaking bipartisan legislation that will enable both private and community microgrids, creating designated zones where these localized energy systems can flourish. Meanwhile, Native Hawaiians on Oahu are gaining access to affordable clean energy through innovative microgrids combining solar panels, batteries, and EV chargers at just 18 cents per kilowatt-hour—less than half the standard utility rate.

On the global stage, China has begun construction on a mammoth $167 billion hydropower project in Tibet that will generate an astounding 70,000 megawatts, nearly matching the entire peak demand of Texas. Electric vehicle adoption continues accelerating, with NIO completing 80 million battery swaps in China and major automakers collaborating through ChargeScape to implement smart charging programs that reduce grid strain during peak periods.

Energy storage innovations are gathering momentum as Google partners with Energy Dome to deploy liquid carbon dioxide batteries capable of providing power for up to 24 hours. These long-duration storage systems will support multiple projects across three continents. Meanwhile, the explosive growth of data centers is dramatically reshaping electricity markets, particularly in PJM where capacity prices have skyrocketed to record highs. With consumers facing rising costs and more data load on the horizon, expect intense debate about who should bear the financial burden of our increasingly digital economy.

Subscribe to stay informed about these rapidly evolving energy transitions that affect us all. How do you think these developments will impact your energy costs and options in the coming years?

Chapters

• 0:00 Oregon's Bipartisan Microgrid Bills
• 0:33 Native Hawaiian Microgrid Opportunity
• 1:34 China's Massive Hydropower Project
• 1:53 EV Charging and Battery Swaps
• 2:42 Gas Turbines and Energy Markets
• 4:33 Energy Stories Conclusion

Transcript

Speaker 1: 0:00

That's your energy stories for this, the fifth week of July 2025. And in the first one, oregon politicians passed two bipartisan bills to enable microgrids within the larger electric grid. One bill directs the Oregon Public Utility Commission to develop a regulatory structure to enable both private and community-enabled microgrids, while allowing municipalities to set up designated microgrid zones. Allowing municipalities to set up designated microgrid zones. The second bill would permit utilities or consultants to evaluate microgrid interconnection requests that would then interconnect those microgrids with a larger power system. Also in the microgrid space, some low and moderate-income Native Hawaiians on Oahu will soon have the opportunity to get microgrids integrating car-mounted solar and batteries. A two-carport configuration will combine 9 kilowatts of solar, a 40-kilowatt-hour battery, an electric vehicle charger and a package called Utility Light. Homeowners will pay a fixed monthly subscription fee of $300 for 25 years, which equates to about 18 cents per kilowatt-hour, far less than Hawaiian Electric's prevailing 42 cents per kWh rate. Utility Light has nine contracts thus far, with additional letters of intent with residential customers for another 120 systems in a community that's currently under construction. The microgrids will be connected to Hawaiian Electric and can access HECO's Bring your Own Device program, with rebates from $400 per kW to $800 for batteries that sell 70% of their stored capacity to the grid for two hours a day.

Speaker 1: 1:34

On another entirely different scale, china has begun building a $167 billion massive hydropower project in Tibet that will dwarf its Three Gorges Dam. Engineering estimates put the generation potential at 70,000 megawatts. For context, ercot's Texas grid peaked at just over 85,000 megawatts. Last year, a joint venture involving BMW, honda, ford and Nissan called ChargeScape heralded a partnership with PSEG Long Island to sign up EVs in PSEG's peak load reduction program with managed charging that will reduce summer peak demand. The goal is to integrate over 6,200 EV drivers into the program and customers will get incentives for optimizing their charging to make sure charging-related demand does not exceed limits during certain times at specific locations during certain times at specific locations. Also, in the EV space, chinese EV manufacturer NIO says it has performed a total of 80 million battery swaps in China seven years after completing its first swap. It took only 110 days for NIO to get from 70 million to 80 million transactions.

Speaker 1: 2:42

Well, google has inked a long-duration storage contract with Italian company Energy Dome, while also making a strategic investment in that unit. The five-year-old startup uses a liquid carbon dioxide-based battery that can provide a supply of electricity for between 8 and 24 hours. The deal with Google is intended to promote development of multiple projects in North America, europe and the Asia-Pacific region, and the companies indicated they had a pipeline of sites and projects in development and contracting stages. Dome Energy already has a contract for a 20-megawatt pilot with Alliant Energy in Wisconsin and another project with Anji in Sardinia, as well as a 160-megawatt undertaking to be developed in India. Well, ge Vrnova and Crusoe, a company that supplies energy to data centers, have signed an agreement for 29 of GE Vrnova's LM2500 Express aero-derivative gas turbine packages to power Crusoe AI data centers. This is expected to support about 1,000 megawatts of demand. Aero-derivatives are just what they sound like turbines designed originally for airplanes, and they can operate in a highly flexible manner. The announcement did not specify when delivery will take place, which is an important piece of data given the long lead times that have been announced by GE and others for most turbines, with some of those lead times over five years.

Speaker 1: 4:05

Merchant energy company Talon will buy two natural gas combined cycle plants in PGM's grid, one in Ohio and one in Pennsylvania from Caithness Energy for $3.5 billion and one in Pennsylvania from Caithness Energy for $3.5 billion, the two plants with a combined nameplant rating of just over 1,900 megawatts are expected to change hands by Q4. Talent has expressed a goal of serving large loads, particularly data centers, and being long. Capacity in PGM just got a whole lot better as the results from PGM's base residual capacity auction were announced last week. As feared by energy consumers, the prices pegged out at the negotiated ceiling price of $329.17. That cap was set up last year after being proposed by Pennsylvania Governor Josh Shapiro and blessed and approved by both PGM and the FERC. Last year BRA had set a record price at nearly $270 per megawatt day.

Speaker 1: 5:03

Pjm estimates the total cost of load that will be paid for capacity by all customers is $16.1 billion for the 2026-27 delivery year. That's up from $14.7 billion the year prior year. That's up from $14.7 billion the year prior and that compares to a total of just $2.2 billion for the 2024-25 delivery year. The next auction for 2027-28 will take place in December, with more data load anticipated and almost no new supply being added to the mix. It's the seller's market and other non-data center companies will become increasingly displeased with the inflationary pressures brought on largely by the existing and forecasted data load. Watch for the political firestorm to intensify rapidly on this one. Well, that's all for this week. Thanks for watching and we'll see you again soon.