Key facts
- Spot power at PJM’s Western hub hit $1,021 per megawatt-hour Tuesday afternoon.
- Day-ahead prices for Wednesday jumped 28% to $295.83 per megawatt-hour.
- Roughly 62,000 megawatts of generation were offline for planned maintenance.
- PJM forecast about 112,400 megawatts of demand for Tuesday.
- PJM projects peak demand will climb 32 gigawatts between 2024 and 2030, with most from data centers.
- FERC rejected a PJM plan to let new data centers connect without matching capacity.
An unseasonable heat blast across the Midwest and Mid-Atlantic has collided with PJM Interconnection’s fall maintenance season, straining the grid that serves 67 million people. PJM issued a Maximum Generation Alert for Tuesday and maintained a capacity advisory through Wednesday, with approximately 62,000 megawatts of generation offline for planned work.
Spot power at PJM’s Western hub reached $1,021 per megawatt-hour Tuesday afternoon, more than double the day-ahead average for that hour, according to Bloomberg. Day-ahead prices for Wednesday surged 28% to $295.83 per megawatt-hour, marking the highest daily average since mid-July. PJM forecast demand of about 112,400 megawatts for Tuesday, which is roughly two-thirds of the grid’s all-time peak set in 2006, indicating the strain is primarily from the supply side. Generators and transmission owners typically conduct upkeep from mid-September through early December. PJM stated that power commitments to warmer regions in the South and West further reduced the available cushion. MISO, which covers parts of 15 states, reported a similar situation due to warm weather, plant outages, and weak wind output, according to spokeswoman McKenzie Barbknecht. PJM spokesman Jeffrey Shields told Bloomberg that unpredictable weather is limiting the time available for essential maintenance and construction on generation and transmission equipment, a pattern that is becoming increasingly common. PJM previously called on demand response in September when about 36,000 megawatts were still offline and experienced a similar squeeze in May.
Beneath the immediate weather challenges, the grid has less operational slack than in the past. PJM projects peak demand will increase by 32 gigawatts between 2024 and 2030, with data centers accounting for all but 2 gigawatts of this growth. The grid operator’s latest capacity auction fell short of the reliability target by 6,831 megawatts. This limited buffer means that every scheduled outage presents a more difficult decision. PJM’s immediate response involved recalling all active generation maintenance tickets effective noon Wednesday. A paired Load Management Alert put demand response customers, who are compensated for reducing usage during grid stress, on notice. The Department of Energy’s emergency order, effective through Friday, serves as a backstop, allowing PJM to operate plants beyond environmental permit limits and, as a last resort before the most severe grid emergencies, direct large customers like data centers onto backup generation. Energy Secretary Chris Wright stated that the DOE will utilize “every available tool to prevent blackouts,” estimating that over 35 gigawatts of unused backup generation are available nationwide. A longer-term solution received a mixed ruling from FERC on October 9. The commission approved PJM’s registry of large loads (customers of 50 megawatts or more) but rejected the core of the grid operator’s plan, which would have allowed new data centers to connect without providing matching capacity if they agreed to be curtailed during emergencies. FERC cited that the framework encroached on state authority over retail rates and appeared to discriminate against large loads, urging states to lead in prioritizing customer curtailment. Commissioner David Rosner separately suggested that non-critical data centers should be prioritized over homes, hospitals, and schools, with states determining these priorities. Approximately five weeks prior, FERC rejected key elements of PJM’s proposed backstop capacity auction. PJM is currently reviewing the FERC order. Jefferies analysts indicated that the ruling could sustain higher capacity prices for longer, benefiting independent power producers such as Constellation Energy, NRG Energy, Talen Energy, and Vistra. The work that was recalled still needs to be completed before the maintenance window closes in early December, meaning that deferring it will push the problem into winter. During Winter Storm Fern in January, generator outages averaged 18 to 19 gigawatts, exceeding PJM’s seasonal projections of 15.9 gigawatts, with equipment failures being the primary cause.