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?

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Episode Transcript

Speaker 1 (00:00):
That's your energy stories for this, the fifth week
of July 2025.
And in the first one, oregonpoliticians passed two
bipartisan bills to enablemicrogrids within the larger
electric grid.
One bill directs the OregonPublic Utility Commission to
develop a regulatory structureto enable both private and
community-enabled microgrids,while allowing municipalities to

(00:21):
set up designated microgridzones.
Allowing municipalities to setup designated microgrid zones.
The second bill would permitutilities or consultants to
evaluate microgridinterconnection requests that
would then interconnect thosemicrogrids with a larger power
system.
Also in the microgrid space,some low and moderate-income
Native Hawaiians on Oahu willsoon have the opportunity to get

(00:42):
microgrids integratingcar-mounted solar and batteries.
A two-carport configurationwill combine 9 kilowatts of
solar, a 40-kilowatt-hourbattery, an electric vehicle
charger and a package calledUtility Light.
Homeowners will pay a fixedmonthly subscription fee of $300
for 25 years, which equates toabout 18 cents per kilowatt-hour

(01:03):
, far less than HawaiianElectric's prevailing 42 cents
per kWh rate.
Utility Light has ninecontracts thus far, with
additional letters of intentwith residential customers for
another 120 systems in acommunity that's currently under
construction.
The microgrids will beconnected to Hawaiian Electric
and can access HECO's Bring yourOwn Device program, with

(01:24):
rebates from $400 per kW to $800for batteries that sell 70% of
their stored capacity to thegrid for two hours a day.
On another entirely differentscale, china has begun building
a $167 billion massivehydropower project in Tibet that
will dwarf its Three Gorges Dam.
Engineering estimates put thegeneration potential at 70,000

(01:47):
megawatts.
For context, ercot's Texas gridpeaked at just over 85,000
megawatts.
Last year, a joint ventureinvolving BMW, honda, ford and
Nissan called ChargeScapeheralded a partnership with PSEG
Long Island to sign up EVs inPSEG's peak load reduction
program with managed chargingthat will reduce summer peak

(02:08):
demand.
The goal is to integrate over6,200 EV drivers into the
program and customers will getincentives for optimizing their
charging to make surecharging-related demand does not
exceed limits during certaintimes at specific locations
during certain times at specificlocations.
Also, in the EV space, chineseEV manufacturer NIO says it has

(02:29):
performed a total of 80 millionbattery swaps in China seven
years after completing its firstswap.
It took only 110 days for NIOto get from 70 million to 80
million transactions.
Well, google has inked along-duration storage contract
with Italian company Energy Dome, while also making a strategic
investment in that unit.

(02:50):
The five-year-old startup usesa liquid carbon dioxide-based
battery that can provide asupply of electricity for
between 8 and 24 hours.
The deal with Google isintended to promote development
of multiple projects in NorthAmerica, europe and the
Asia-Pacific region, and thecompanies indicated they had a

(03:10):
pipeline of sites and projectsin development and contracting
stages.
Dome Energy already has acontract for a 20-megawatt pilot
with Alliant Energy inWisconsin and another project
with Anji in Sardinia, as wellas a 160-megawatt undertaking to
be developed in India.
Well, ge Vrnova and Crusoe, acompany that supplies energy to
data centers, have signed anagreement for 29 of GE Vrnova's

(03:33):
LM2500 Express aero-derivativegas turbine packages to power
Crusoe AI data centers.
This is expected to supportabout 1,000 megawatts of demand.
Aero-derivatives are just whatthey sound like turbines
designed originally forairplanes, and they can operate
in a highly flexible manner.
The announcement did notspecify when delivery will take

(03:54):
place, which is an importantpiece of data given the long
lead times that have beenannounced by GE and others for
most turbines, with some ofthose lead times over five years
.
Merchant energy company Talonwill buy two natural gas
combined cycle plants in PGM'sgrid, one in Ohio and one in
Pennsylvania from CaithnessEnergy for $3.5 billion and one

(04:16):
in Pennsylvania from CaithnessEnergy for $3.5 billion, the two
plants with a combinednameplant rating of just over
1,900 megawatts are expected tochange hands by Q4.
Talent has expressed a goal ofserving large loads,
particularly data centers, andbeing long.
Capacity in PGM just got awhole lot better as the results
from PGM's base residualcapacity auction were announced

(04:37):
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 yearafter being proposed by
Pennsylvania Governor JoshShapiro and blessed and approved
by both PGM and the FERC.
Last year BRA had set a recordprice at nearly $270 per

(05:02):
megawatt day.
Pjm estimates the total cost ofload 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 billionthe year prior year.
That's up from $14.7 billionthe year prior and that compares
to a total of just $2.2 billionfor the 2024-25 delivery year.

(05:24):
The next auction for 2027-28will take place in December,
with more data load anticipatedand almost no new supply being
added to the mix.
It's the seller's market andother non-data center companies
will become increasinglydispleased with the inflationary
pressures brought on largely bythe existing and forecasted
data load.
Watch for the politicalfirestorm to intensify rapidly

(05:47):
on this one.
Well, that's all for this week.
Thanks for watching and we'llsee you again soon.