Data centers could drive up costs in PJM’s capacity auction

Demand from data centers could add $5 billion to $10 billion to the cost of the capacity auction PJM plans to hold in December 2026, Monitoring Analytics estimates. That range applies to a single auction, the one for the 2029-2030 delivery year, according to the independent market monitor’s estimate, reported on November 12 by the Pennsylvania Capital-Star.

At 12:15 p.m. Eastern time that same day, Monitoring Analytics announced the release of its report on the first nine months of 2026. Its press release forecasts a significant increase in costs at the December auction, without specifying the size of the increase.

A planned data center can increase the amount of capacity PJM needs to secure

PJM’s grid serves about 67 million people across all or parts of 13 U.S. states and in Washington, D.C., the nation’s capital. To estimate how much capacity it needs at peak times, PJM includes projected demand from the data center projects it has selected. A data center can therefore increase the amount of capacity PJM needs to secure even before construction begins.

At the capacity auction, PJM secures commitments to provide that capacity and sets the price. During the delivery year, PJM calculates the amounts owed under those commitments each day and bills for them each week.

If PJM needs to secure more capacity, the price of capacity may rise. Monitoring Analytics estimates that the price could again reach the auction cap. Local rates then determine how much of the cost each customer class bears. A household could therefore pay more for the same number of kilowatt-hours. The size of any increase in its bill remains unknown.

An estimated $29.4 billion in additional costs across four past auctions

Monitoring Analytics attributes a total of $29.4 billion in additional costs to existing and projected demand from data centers across the four auctions covering the 2025-2026 through 2028-2029 delivery years. Joseph Bowring had already shared that estimate in July. The November estimate of $5 billion to $10 billion applies to the next auction, whose outcome is still unknown.

Monitoring Analytics recommends postponing the December auction until after a backstop auction. The backstop auction would allow data centers to contract with power producers to meet their needs. In its response to the Pennsylvania Capital-Star, PJM says its proposals allow states to assign the costs to the large customers involved.

According to PJM’s account, on September 29 the federal regulator accepted for filing the grid operator’s proposed rules for the backstop auction. It suspended the rules’ effective date until February 28, 2027, and continued its review of how the costs would be allocated.