PJM's Capacity Shortfall: What It Means for Ohio Firms

Ohio market insight · Capacity & grid

Updated September 27, 2026Ohio Commercial Energy editorial teamHow we review content Book a free 15-min bill review

The short answer

For the first time, PJM's capacity auctions have not bought enough supply to meet its own reliability standard: the 2027/28 auction came up 6,623 MW short and the 2028/29 auction 6,831 MW short, leaving reserve margins around 14–15% against a 20% target. For Ohio businesses that means three things. Prices: capacity is pinned at the price cap (about $119–$122 per kW-year of capacity tag) through May 2029, with new costs possible from a backstop procurement. Reliability: more emergency alerts and demand-response calls in extreme weather, though PJM has so far served record load without rotating outages. Opportunity: sites that can curtail are more valuable to the grid than they've been in years.

For the concepts behind reserve margins and emergency procedures, see grid reliability explained; for every auction price, see PJM capacity auction results; for the wires build-out and who pays for it, see grid infrastructure costs; for smart meters and interval data, see grid modernization and your business; and for how federal permitting and interconnection affect new supply, see permitting reform and Ohio prices.

The numbers

Delivery year	Price ($/MW-day)	Reserve margin procured	Target	Shortfall
2025/26	$269.92	18.5%	Met	None
2026/27	$329.17 (cap)	18.9%	19.1%	About 309 MW (ICAP)
2027/28	$333.44 (cap)	14.8%	20%	6,623 MW
2028/29	$325.00 (cap)	About 14.5%	20%	6,831 MW

PJM reported the 2028/29 reserve margin as 14.4% in its auction report and 14.7% in its announcement; either way it's well below target. The 2027/28 auction was the first in which the whole region, including utilities that supply their own capacity, fell short.

A 20% reserve margin corresponds to PJM's "one event in ten years" standard — the expected frequency of having to interrupt firm customers because of a supply shortage. Falling short doesn't mean outages are expected; it means the cushion for extreme heat, cold and plant failures is thinner than planned.

Why the grid is short

Demand is rising faster than anyone planned. PJM's January 2026 forecast has summer peak demand rising by nearly 66,000 MW over ten years — about 3.6% a year, versus 0.3% a year in its 2021 forecast. Data centers account for most of it: PJM attributed nearly 5,100 MW of the 5,250 MW jump in the 2027/28 forecast to them, and PJM's independent market monitor has said current capacity-market conditions are "almost entirely the result of large load additions from data centers." Central Ohio is one of the major hubs, which is why AEP Ohio now has a separate data center tariff with minimum-demand commitments for new loads over 25 MW; see the AEP Ohio data center tariff.

New supply is slow. Only 525 MW of new generation and uprates cleared in the 2028/29 auction. PJM's reformed interconnection queue is working through a 220 GW first cycle with studies running into early 2028, and a separate fast-track group of 51 projects (about 9,300 MW) is expected mostly online by 2030.

Existing supply counts for less. Accreditation reforms now credit each resource for its expected output in extreme weather, and older plants continue to retire.

What PJM is doing about it

Price collar. Capacity prices are capped near $325/MW-day and floored near $175 through the 2029/30 auction (December 2026), which limits price spikes but doesn't create supply.
Backstop procurement. PJM filed a one-time procurement at FERC in July 2026 aimed at the roughly 6.8 GW shortfall, with offers due September 30–October 21 and results planned for December 2, 2026. By default its costs flow to the utilities and suppliers serving load in each zone; PJM is relying on states to decide whether new data-center loads should bear them.
Faster interconnection. An Expedited Interconnection Track approved by FERC in June 2026 allows up to ten large projects (250 MW or more) a year to get interconnection agreements within about ten months, through 2027.
Large-load curtailment. PJM has proposed that new data-center load that doesn't bring its own supply may be curtailed in emergencies. On July 2, 2026, the Department of Energy authorized directing large loads with backup generation to switch to it; it wasn't needed.

What it means for your business

Price. Capacity costs are known and high: about $120 per kW-year of tag for 2026/27, $122 for 2027/28 and $119 for 2028/29. The unknowns are the 2029/30 price (collar range roughly $64–$119 per kW-year), the backstop cost and who bears it, and everything after the collar ends. For dollar impacts by account size, see capacity bill math.

Reliability. Expect more Maximum Generation alerts and demand-response calls. In July 2026 PJM served an all-time record load of about 168 GW with roughly 6 GW of demand response and without rotating outages. The more realistic local risk in Ohio is transmission damage during severe weather — as in June 2022, when PJM directed load shedding in central Ohio after storms. See heat-emergency operations and continuity planning.

Opportunity. Demand response now clears at the same capped price as generation, and PJM relies on it: about 7,000 MW cleared in the 2028/29 auction. If you can reliably shed load for a few hours, see demand response earnings.

An action list

Get your capacity tag for 2026/27 and ask when the 2027/28 tag will be available. Know the tag-to-peak ratio for each site.
Check contract language for how new PJM charges — such as backstop costs — are handled, and whether terms cross June 2029.
Decide your curtailment posture: tag management, demand response, or neither. Don't promise the same kW to both without understanding the trade-off.
Refresh your outage plan before next summer, including restart sequencing and generator testing.
Watch December 2026, when the 2029/30 auction result and the backstop outcome both land.

FAQ

Is Ohio going to have blackouts because PJM is short on capacity?

The shortfall raises the risk during extreme weather but doesn't make outages routine. PJM uses demand response and emergency procedures before rotating outages, and it served its July 2026 record without them.

Why is PJM short when prices are so high?

Prices are capped, new plants take years to build and connect, and demand forecasts — driven mostly by data centers — have risen faster than supply can respond.

Will the shortfall raise my electricity bill further?

Capacity prices are already at the cap through May 2029. Additional costs could come from the backstop procurement, depending on how states and PJM assign them.

Can my business help and get paid for it?

Yes, if you can reliably reduce load when called. Demand response is paid the capacity price through a curtailment service provider, with penalties for not performing.