PJM Shifts Data Center Power Burden to States as Curtailment Rules Weigh on Real-Time Market
PJM's new data center curtailment plan and state-level procurement shift add bearish weight to a real-time market that jumped 76% in the first quarter.
PJM released a plan on August 5 (2026-08-05) placing responsibility for new data center power procurement on individual states, a shift traders say could dampen real-time price formation across the mid-Atlantic grid. PJM Western Hub spot power settled at $78.03/MWh at Friday's close (2026-08-15).5
That plan came eleven days after a broader July 28 (2026-07-28) board action. PJM's board approved mandatory curtailment of large loads, including data centers, during peak stress events, and separately proposed a backstop capacity auction requiring new resources to be online by June 1, 2032. PJM hired Charles River Associates to oversee a bilateral matchmaking process that opened with a request for proposals on June 9. Curtailment provisions, if implemented, would reduce the demand events most responsible for sharp real-time price spikes.4
Those spikes have been sizable. Monitoring Analytics, PJM's independent market monitor, found grid power prices jumped 76% in the first quarter of 2026, attributing the move directly to rampant data center demand. The same demand PJM now wants authority to curtail has been the market's main price driver all year.3
Capacity market results provide the structural backdrop. The most recent base auction fell 6.8 GW short of requirements, with 2028/2029 delivery year prices clearing at a regulatory cap of $554.72/MW-day for most of the region, according to OilPrice.com. The ComEd local delivery area cleared at $776.69/MW-day. PJM estimated that absent the cap, clearing prices would have been roughly 70% higher. Total payouts to generators for the year starting June 2028 matched the last auction's all-time record of $16.4 billion.3
Capped capacity prices and record payouts sit uneasily side by side. Suppressed payments reduce the economic incentive to build new generation, sustaining the same peak-hour scarcity that has driven real-time volatility, even as headline auction revenues hit historic levels.3
Not everyone accepts the bearish read. Todd Snitchler, president and CEO of the Electric Power Supply Association, whose members operate more than 225,000 MW of US generation, argues that market fundamentals are functional: over 55 GW of new generation has cleared the interconnection queue and is ready to build, and another 220 GW entered the latest review cycle. When PJM separately asked developers whether they were willing to contract directly with large loads, over 130 GW came forward.2
That developer appetite for direct contracting is what the July 28 (2026-07-28) bilateral matchmaking process is designed to channel. But Jefferies, in analysis reported by Utility Dive, argued that a backstop auction addressing only a prior auction's deficit fails to resolve the core issue: new large loads that have yet to materialize in the capacity queue. The bilateral path is available. Getting data centers to commit and getting developers to build are separate problems.4
Grid Strategies projects US data center load will grow by 65 GW to 90 GW by 2029. Transmission constraints compound the pressure: FERC directed regional grid operators in late 2021 to upgrade infrastructure, but multiple operators have since requested deadline extensions, according to datacenterdynamics.com. The supply side has capacity; moving it is another matter.1
The combined effect of curtailment authority, state-level procurement responsibility, and a June 2032 resource deadline is that near-term real-time conditions stay governed by existing supply and the same data center demand that sent first-quarter prices up 76%. Whether PJM or FERC adjusts or removes the capacity price cap before the next auction — the variable separating record payouts from the construction starts needed to relieve scarcity — is what the forward curve will need to price.3,4