PJM States Urge Action as Delays Threaten Reliability

On January 16th, the U.S. Department of Energy, along with the governors of every state in PJM’s territory, published a “Statement of Principles Regarding PJM.” The letter came in reaction to PJM’s recent capacity auction, which fell more than 5% short of reliability targets and raised serious concerns over future grid reliability and affordability in the nation’s largest power market. The Statement of Principles urges PJM to hold a “Reliability Backstop Auction” to procure new capacity resources through 15-year PPAs that will provide the price certainty needed for developers to build new generation. Yet this auction, should it commence, will likely fail to address the fundamental issue facing the PJM region: long timelines for bringing new generation online amidst quickly growing load.

Unprecedented Growth

The shortfall in PJM’s most recent capacity auction, for delivery years 2027/’28, reflects skyrocketing load forecasts. PJM’s 2030 peak load estimates increased from 158 GW in 2023 to 183 GW in 2026, driven largely by the growth of AI data centers in places like Ohio, Pennsylvania, and northern Virginia. As such, the amount of on-call, dispatchable generation necessary to maintain reliability and avoid blackouts has increased significantly over the span of a few short years. This development has also coincided with regulatory overhaul and rule changes regarding PJM’s capacity accreditation, which have driven delays in capacity auctions and rendered developers unable to respond quickly to price signals in the market.

Generation Shortfalls

Rising load forecasts and high capacity prices highlight a need for more generation, but firm capacity is not coming online fast enough. While more than 12 GW of generation capacity is currently slated to energize before 2028, nearly 11 GW of it is renewable, which is non-dispatchable and less able to stabilize the grid in moments of peak stress. The little gas generation that has connected to the grid recently is illustrative of the extensive wait times new resources must go through: the 1.1 GW Trumbull Energy Center gas plant in Ohio, which energized this past December, was first proposed in 2015. In the face of enormous price signals in PJM’s market, developers may nonetheless be unable to execute on new dispatchable projects soon enough to address reliability issues.

Interconnection Reforms

For projects that came online between 2020 and 2025, the average time to commercial service was over five years in the PJM region. These durations have been driven by the rise of renewable energy projects, which tend to be individually smaller and more modular, and thus more numerous than traditional large power plants. Developers for many of these projects were incentivized by a lack of withdrawal penalties, as well as minimal financial commitment or project control requirements, to submit multiple, often speculative, projects to the interconnection queue. PJM froze new interconnection applications in 2023 and has recently implemented new interconnection procedures, such as the Reliability Resource Initiative, designed specifically for shovel-ready dispatchable generation, as well as requiring that some projects resubmit applications. While these reforms have reduced total project backlog, other delays, such as supply chain disruptions or permitting approvals, continue to delay the timely interconnection of new generation.

Going forward

A new Reliability Backstop Auction, similar to the one proposed by the Secretary of Energy and numerous governors of PJM states, is currently being prepared by PJM. It should address concerns around the need for “15-year price certainty” to incentivize long-term commitments for new firm generation. Yet price certainty alone won’t suffice without the regulatory certainty to match it. Despite interconnection queue reforms, prospective projects face a long and unpredictable path to energization, which has chilled new investment despite an extended period of high prices. It remains to be seen if more reforms can be implemented to fully energize and support new generation and stave off serious reliability issues in the nation’s largest power market.

Correction (February 10, 2026): An earlier version of this Insight incorrectly included projects that are not classified as “Active” in the PJM interconnection queue, inflating the capacity figure to 221 GW. The correct capacity for “Active” projects is 31.8 GW. As such, the analysis, language, and final graphic have been updated.

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