Latest news with #powerauction
Reuters
22-07-2025
- Business
- Reuters
Biggest US power grid auction prices rise by 22% to new heights
July 22 (Reuters) - Prices out of the biggest U.S. power auction, held by grid operator PJM Interconnection, cleared at $329.17 a megawatt-day, roughly 22% higher than last year's record-high levels as electricity demand continues to outstrip supply, according to results released by the organization on Tuesday. A recent surge in U.S. power consumption driven by Big Tech's data center demand has butted up against roughly a decade of shrinking power supplies in PJM, North America's largest power grid operator, leading to a supply shortfall that has driven up prices in the capacity auction. PJM's capacity auction determines what power plant owners in the grid network, which covers one in five Americans, will be paid to guarantee that they pump out electricity during times of extreme demand to help avoid blackouts. Shares of major power-producing companies that receive capacity payments rose on the auction results. Talen Energy shares were up over 9%, Constellation Energy shares rose over 5%, and NRG Energy (NRG.N), opens new tab climbed over 6% in trading after the bell. The payments are a sign of the energy supply and demand balance in PJM, with higher prices typically acting as an incentive for developers to build more power plants. PJM's territory covers 13 states and the District of Columbia, as well as the biggest concentration of data centers in the world, including Virginia's "Data Center Alley." The latest auction, which covers the year beginning next summer, is showing signs of a continued supply crunch. PJM attracted 2,669 megawatts of additional power supplies, which will be added through upgrading existing power plants and adding new ones, marking the first time in the last four auctions that new generation was added. The additions, however, represent only about half the amount of new power demand PJM expects to see over the period the auction covers. While prices overall increased from last year, two zones within PJM - covered by Baltimore Gas and Electric Company and Dominion Energy (D.N), opens new tab - saw price decreases. "Rapid electricity demand growth continues to outpace the rate of new generation," Evercore ISI analyst Nicholas Amicucci said in a note of the higher prices. Year-ago auction prices shot up by more than 800%, rising to $269.92 per megawatt-day from the previous year as data center demand crept up. Prices from that auction began to take effect last month, while the most recent results will impact bills beginning next summer. Those high payment prices, which are ultimately paid for by the public, drew a backlash from state consumer advocates, politicians and environmental groups, leading to several changes at PJM. PJM says it expects power bills for homes and businesses will rise only 1.5% to 5% year-over-year as a result of the latest auction results. Prices in BGE and Dominion may decline, it said. The types of power-generating capacity cleared through the auction included 45% natural gas, 21% nuclear, 22% coal, 4% hydro, 3% wind and 1% solar. Environmental groups, which successfully sued over the last PJM capacity results, said PJM has failed to quickly connect new carbon-free renewable power like wind and solar. 'PJM has failed our communities through its refusal to adopt substantive reforms, completely at odds with its mission of providing reliable energy at the lowest cost to its customers,' said Jessi Eidbo, Sierra Club senior adviser. PJM said it has approved the connection of 46,000 MW of power plants, many of them solar, but those projects have not yet been built for reasons outside the grid operator's control.
Yahoo
22-07-2025
- Business
- Yahoo
Biggest US Power Sale to Offer Glimpse of AI's Cost to Consumers
(Bloomberg) -- The biggest and most closely watched US power auction is set to offer an early glimpse of what the AI boom will cost consumers. Most Read from Bloomberg PJM Interconnection LLC, which operates the largest US grid and is home to the biggest concentration of data centers in the world, is scheduled to release the results of its annual power sale Tuesday. The auction, which determines how much generators will get paid for generating capacity at new and existing power plants, is also an indicator of how high consumer utility bills will be. Last year PJM procured supplies for a record $14.7 billion, and this year similar costs per megawatt could result in total payouts of $13 billion to $16 billion. The soaring price tag is due to booming demand from data centers, according to recent analysis from the grid operator's independent market monitor. That's raising concerns that consumers — not technology companies — would bear the brunt. READ: AI Needs So Much Energy It's Distorting US Power for Millions The explosive energy consumption of AI data centers is 'leading to massive transfer of wealth from essentially existing customers and residential customers,'said Maryland People's Counsel David Lapp, the state advocate for residential utility consumers. Americans across the country are already grappling with climbing utility bills as aging infrastructure and more extreme weather raise operational costs and energy demand — and PJM is becoming a test case for AI's voracious energy needs. At the same time, the Trump Administration's recent rollback of renewable tax incentives means much of the massive queue of power projects waiting to get built will get a lot more expensive, compounding the hit to consumers. Last year's auction, which saw costs rise about 600%, created a political firestorm that ultimately led PJM and the governor of Pennsylvania to agree to set both a price floor and cap for the first time in the auction. This year's results could similarly 'put policy makers' feet to the fire,' said Barclays Plc analyst Nicholas Campanella. PJM declined to comment. The cost of supply last year rose to about $270 per megawatt a day while Baltimore cleared more than 70% higher and Virginia, home to the biggest concentration of data centers in the world, was close behind. Maryland saw the highest capacity costs in the last auction, with Exelon Corp.'s Baltimore Gas & Electric utility tacking on $16-$20 to consumers' monthly bills. However, the utility reached an agreement with regulators to pass through those costs in the spring and fall months to avoid adding to to already high summer bills. Both Maryland and Virginia should see capacity costs decrease under the cap.
