PJM Interconnection's 2022-23 capacity market auction cleared at some of the lowest levels in auction history with the RTO price clearing at $50/MW-day due to a lower load forecast, lower offer prices from resources and other factors, the grid operator said June 2.
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The RTO clearing price of $50/MW-day represents a 64% decrease from the last auction clearing price of $140.00/MW-day.
Stu Bresler, PJM's senior vice president of market services, described the auction as a "pretty big day for PJM," during a briefing with reporters.
This was the first capacity auction in three years due to back and forth with the Federal Energy Regulatory Commission over the rules, mostly the minimum offer price rule, Bresler said.
Renewable energy resources, nuclear units and new natural gas-fired generators saw the greatest increases in cleared capacity, while coal units saw the largest decrease, PJM said in a statement.
The grid operator said prices in this year's auction were significantly lower than prices in the previous auction for several reasons:
- A lower load forecast and reserve requirement, which in turn decreases the amount of capacity PJM needs to procure
- A 19% drop in the net Cost of New Entry, or CONE, which is a reference figure used to estimate the cost of a new generator to be built and enter the market
- Overall lower offer prices from resources participating in the auction
However, prices in certain parts of the PJM footprint were higher than the RTO clearing price.
Specifically, in five areas, ComEd, Duke Energy Ohio & Kentucky, the Mid-Atlantic Area Council (MAAC) region, Eastern MAAC region, and Baltimore Gas & Electric (BGE), capacity prices were higher than the overall PJM price.
For ComEd, the price is $68.96/MW-day; for Duke Energy Ohio & Kentucky, the price is $71.69/MW-day; for MAAC, the price is $95.79/MW-day; for Eastern MAAC, the price is $97.86/MW-day; and for BGE, the price is $126.50/MW-day, according to PJM.