PJM Comes Up 6,623 MW Short for the First Time, and Data Centers Explain Almost All of the Gap

PJM Interconnection's capacity market has now produced the result its critics and its defenders both feared. The 2027/2028 Base Residual Auction, published on December 17, cleared 134,479 MW of unforced capacity at the cap of $333.44 per megawatt-day across the whole footprint. Add the 11,299 MW committed by utilities that self-supply under the Fixed Resource Requirement option, and PJM procured 145,777 MW. That is 6,623 MW short of the reliability requirement, by the figure in PJM's release, or about 6,517 MW by the auction report's calculation.

Either way it is the first auction in which the entire regional transmission organization, including the self-supply areas, fell short. PJM's target installed reserve margin for 2027/2028 is 20%, the level its studies say is needed to meet a one-day-in-ten-years loss-of-load standard. The parameters in PJM's results presentation show where the gap came from. Forecast peak load for 2027/2028 is 164,579 MW, up 5,250 MW or 3.3% from the 159,329 MW used for the previous auction.

PJM's own release is blunt about the cause: nearly 5,100 MW of the roughly 5,250 MW increase in forecast peak is attributable to data center demand. That is the clearest statement yet from the grid operator that the shortfall is a data center story. The presentation also lists a factor that has nothing to do with generation. The Chanceford-Doubs 500 kV backbone transmission line has been delayed, which reduces the capacity that can be imported into constrained areas.

The PJM tariff treats a shortfall of this size as a triggering event. A reserve margin more than one percentage point below target requires an investigation into the cause. Three broad approaches are on the table across PJM's states and stakeholder process. The first is to accelerate supply: PJM's Reliability Resource Initiative has already fast-tracked about 11,000 MW of projects into the interconnection queue, though most cannot be online by 2027. None of these changes the arithmetic for 2027/2028, which is now locked in.