PJM auction hits price cap as AI data centers surge demand

The PJM Interconnection, which manages the electricity grid for about 67 million people across 13 U.S. states and the District of Columbia, held its 2028‑29 capacity auction on July 14. The auction cleared at the federally set ceiling of $325 per megawatt‑day, the same price cap reached in the two preceding auctions. The result reflects a supply shortfall of roughly 6.8 GW, with only 525 MW of new generation capacity cleared, while peak demand hit a record 168.2 GW on July 2.

Data centers that support artificial‑intelligence workloads are identified as the primary driver of the demand surge. PJM’s own monitoring estimates that about $6.3 billion of the $16.4 billion total capacity charges from the auction are directly attributable to data‑center load, and $29.4 billion over the last four auctions combined. Analysts note that without the price cap, unconstrained capacity prices could have risen to $554 /MW‑day region‑wide and $777 /MW‑day in the Chicago zone. PJM President and CEO David Mills warned that demand continues to outpace supply, while consumer groups argue the cap merely delays higher costs rather than adding new generation. Moody’s highlighted that the current market structure socializes the cost of new supply across all customers, unlike other U.S. power markets where large new‑load customers secure power through direct contracts.