What Happened in the 2023/2024 PJM Capacity Auction?

At the 2023/2024 PJM Capacity Auction, PJM cleared at $34.13 per megawatt (MW)-day. GE, MAAC, and DPL-South were somewhat higher. All zones were priced significantly lower than in the prior auction.

Matthew Tanner and Vir Chahal write that auction timing and bidding behavior were the largest drivers of low market prices. Regulatory changes such as the revised minimum offer price rule likely had some impact, but not enough to explain $34/MW-day clearing prices.

The authors estimate that approximately 25,000 MW of resources are underwater at these prices, even with the currently elevated energy revenues. A further 10,000 to 15,000 MW of nuclear and renewables cleared that have other sources of revenues, such as renewable energy certificates or state subsidies.