PJM December 2025 capacity auction hits record $333/MW-day; data centers account for 40% ($6.5B) of total $16.4B cost

Event

PJM Interconnection’s December 2025 Base Residual Auction (the 2027/2028 BRA, run December 17-18, 2025, for the delivery year beginning June 1, 2027) cleared at $333.44/MW-day — at the FERC-approved price cap across all zones — marking the third consecutive record-high capacity auction in PJM’s history.

The PJM Market Monitor (Monitoring Analytics) attributed the surge explicitly: data center load accounted for $6.5 billion, or 40%, of the total $16.4 billion in auction costs. The forecast peak load for the 2027/2028 delivery year was approximately 5,250 MW higher than the prior auction’s forecast, with ~5,100 MW of that increase attributable to data center demand.

Reliability Breach

For the first time in PJM’s history, the 2027/2028 auction cleared short of PJM’s reliability requirement — 6,623 MW below the one-event-in-10-years standard with a 20% reserve margin. The committed supply was insufficient to meet the standard even after all procured resources were counted. The shortfall is directly attributable to demand growth from data centers outpacing new generation additions.

Auction Price Escalation Trajectory

Ratepayer Mechanism

PJM capacity costs are socialized across all load-serving entities in each pricing zone. Residential customers in Virginia, Pennsylvania, Maryland, Ohio, and Illinois pay capacity charges through utility bills. Three consecutive record auctions translate directly to material household electricity cost increases in the states with the highest concentration of hyperscaler AI datacenter buildout.

The PJM Market Monitor’s language is explicit: “Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, the significant shortfall in cleared capacity, and high prices.”

Significance

This event provides the clearest quantified evidence of the ratepayer cost-shift mechanism in the AI-datacenter demand shock. PJM’s auction data — generated by a regulated market monitor, not an advocacy estimate — places a dollar figure ($6.5B in one auction cycle) on the cost that AI datacenter demand added to the grid’s capacity market. It is load-bearing evidence for convergent-energy-demand-shock-crypto-and-ai and for potential reporting on the AI demand shock’s cost-socialization mechanism.

Additional Context (tick-20 verification)

The preceding 2026/2027 BRA (run July 22, 2025) cleared at $329.17/MW-day (all zones uniform) with total costs of $16.1 billion, narrowly short of the 19.1% reliability target by 309 MW ICAP. The December 2025 auction’s 6,623 MW shortfall was the escalation of that earlier narrow miss. Monitoring Analytics’ Q1 2026 State of the Market Report (937 pages) documents the three-auction aggregate: data centers increased capacity revenues by $23.1 billion across the 2025/2026, 2026/2027, and 2027/2028 BRAs combined; customer bill impact from the last two auctions: $13.8 billion (~0.85 cents/kWh). FERC denied the Market Monitor’s November 2025 complaint (EL26-30) seeking authority to block data center interconnection on reliability grounds (March 2026). NERC escalated to a mandatory Level 3 “Essential Actions” Alert on May 5, 2026, requiring grid entities to implement seven mandatory actions for computational load management by August 3, 2026.

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