PJM Power Costs Jump 50% as Data Centers Drive Capacity Surge
Wholesale electricity costs in the PJM Interconnection territory surged 50.3% in the first half of 2026, largely due to higher energy prices and a tripling of capacity costs. An independent market monitor attributed a significant portion of this increase to projected data center demand. The monitor recommended changes to capacity auctions to prevent other customers from bearing these costs.
Wholesale electricity costs across the PJM Interconnection's 13-state territory, including the District of Columbia, increased by 50.3% in the first half of 2026, rising to $114.50 per megawatt-hour from $76.16 a year prior. This surge was primarily driven by a 207.1% increase in capacity costs and a 47.7% rise in energy costs.
According to a report from Monitoring Analytics, the independent market monitor for PJM, projected data center demand significantly contributed to this increase, adding $11.11 per megawatt-hour to wholesale power costs, accounting for 9.7% of the total. Independent Market Monitor Joseph Bowring stated that PJM's capacity auctions for the 2025-26, 2026-27, and 2027-28 delivery years were not competitive, primarily due to the inclusion of forecast data center demand.
Bowring recommended that forecast data center demand be excluded from future capacity auctions. He also suggested requiring data centers to provide their own new electricity generation to prevent existing customers from absorbing the associated costs. Additionally, the report highlighted a record $2.2 billion shortfall in customer recovery of congestion charges, indicating flaws in PJM's financial transmission rights market.