PJM Capacity Market: Forecasts, Auction Insights & Merchant Curves

Last updated: April 2026. Reviewed bi-annually alongside Noreva’s merchant curve releases.

PJM Interconnection operates the most widely watched capacity market in the United States. With a large and diverse footprint, PJM’s capacity market, the Reliability Pricing Model (RPM), remains a benchmark for project finance, asset valuation, commercial strategy, and risk management across North American power markets. For developers, investors, lenders, traders, and asset owners, understanding PJM forward capacity prices is essential.

Noreva provides institutional-grade PJM capacity forecasts, including near-term auction clearing price models and long-term merchant curves built for underwriting, valuation, and market decision-making. PJM is the reference market for forward capacity pricing, where locational and regulatory detail materially affect asset economics.

How PJM’s Capacity Market Works

PJM’s RPM secures generation commitments through a forward auction structure. The Base Residual Auction (BRA) procures capacity approximately three years before the delivery year, creating a forward price signal used by developers, lenders, and market participants. Incremental auctions allow adjustments between the BRA and delivery.

Clearing prices are determined by the interaction between PJM’s demand curve and the supply stack of offered resources, with outcomes set for the overall RTO and for constrained local areas. Key structural features of PJM’s capacity market include:

Capacity Performance (CP)

Resources that clear in the BRA are subject to performance obligations during emergency conditions. Non-performance is penalized, and over-performance can be rewarded. CP is one of the key elements reshaping how reliability is valued in PJM.

Locational Deliverability Areas (LDAs)

PJM’s footprint is divided into local areas with import limits. Constrained LDAs such as BGE, DOM, PSEG, EMAAC, and SWMAAC can clear at a premium to the broader RTO price, reflecting locational capacity value.

UCAP vs. ICAP

PJM procures capacity on an Unforced Capacity (UCAP) basis, adjusting resources for outage performance. That distinction remains essential for realistic revenue modeling.

ELCC for Variable Resources

Wind, solar, and storage resources receive capacity credit based on ELCC, which affects expected capacity revenues as renewable penetration rises. The broader valuation implications of shifting ELCC scores are examined in The ELCC Crunch: How Shifting Capacity Values Are Redefining Asset Valuation.

Why PJM Capacity Prices Are Volatile

PJM capacity prices are shaped by a combination of structural, regulatory, and resource-mix factors.

Dispatchable fleet retirements tighten reserve margins and reduce the supply of firm capacity. Coal and nuclear exits are among the core structural drivers of higher clearing prices in recent cycles. The broader economics behind coal’s exit from the stack are explored in Why Keeping Coal Online Will Be So Expensive.

PJM’s footprint includes some of the most important data-center load growth corridors in the country, especially in Virginia. That demand growth tightens the reserve margin from the demand side and amplifies the price impact of supply retirements. The broader capacity-chasing dynamic is examined in Why Everyone Is Chasing Capacity.

Large volumes of requested new capacity remain stuck in interconnection queues, slowing the entry of new supply even when price signals are strong. How this supply-demand imbalance shapes PJM’s clearing mechanism is explored in Determining Demand in PJM’s Auction Edition.

PJM’s rules continue to evolve across capacity performance, price collars, ELCC treatment, auction design, and broader stakeholder reforms. That creates forecast risk and makes scenario-based analysis necessary. The broader regulatory dynamics are discussed in Why PJM Isn’t Ready to Let Capacity Prices Run and PJM Backstop Bonanza.

The FERC-approved price cap of $329.17/MW-day (2026/27) and $333.44/MW-day (2027/28) is now itself a structural feature of near-term PJM capacity pricing and a key uncertainty for what happens after the cap expires.

Driver

Mechanism

Price Direction

Coal and nuclear retirements

Removes dispatchable MW and tightens reserve margins

Upward

Data-center load growth

Raises peak demand and tightens the balance

Upward

Interconnection queue delays

Slows new supply entry

Upward

Regulatory reforms

Changes ELCC, performance rules, and clearing dynamics

Mixed / upward for thermal

New renewable entry

Adds MW but at declining ELCC values

Limited downward on capacity

PJM Capacity Auction Results and Price History

PJM capacity prices have ranged from near-zero in oversupplied years to all-time highs above $400/MW-day in constrained LDAs. Recent BRAs have repriced the market sharply upward as retirements outpaced new entry and data-center load surged.

PJM BRA Recent Clearing Prices ($/MW-day, UCAP)

Delivery Year

RTO

Constrained LDAs

Notes

2024/25

$28.92

$73.00 (BGE)

Pre-tightening baseline

2025/26

$269.92

$466.35 (BGE), $444.26 (DOM)

Sharp jump driven by tightening conditions

2026/27

$329.17

$329.17 system-wide

Cleared at FERC-approved cap across all LDAs

2027/28

$333.44

$333.44 system-wide

Cleared at FERC-approved cap across the RTO

Key historical dynamics include:

  • The 2014 to 2016 Polar Vortex cycle, which exposed gas-dependent generation risk during extreme cold and catalyzed the move toward Capacity Performance.
  • The near-zero clearing years (2018 to 2021), which reflected an oversupplied market following earlier reforms and before the current load-growth surge.
  • The 2025/26 BRA, which produced record-setting prices and was analyzed in PJM Capacity Prices Reveal Structural Grid Stress.
  • The 2026/27 and 2027/28 BRAs, both of which cleared at the FERC-approved price cap across the RTO, indicating sustained structural tightness.

Noreva’s PJM Capacity Coverage

Noreva provides forward-looking clearing price forecasts for upcoming PJM BRAs, covering the RTO-wide price as well as major constrained LDAs. These outputs are structured for direct integration into project finance and lender-case workflows. The underlying methodology is detailed on our How It Works page.

Noreva’s PJM capacity merchant curves extend the forward capacity signal over a 25-year horizon, supporting long-dated valuation, PPA structuring, acquisition analysis, and infrastructure underwriting.

Coverage includes the RTO-wide clearing price and major LDAs such as MAAC, EMAAC, SWMAAC, PSEG, BGE, DOM, and others. Locational granularity remains essential for realistic valuation of assets in constrained zones.

Noreva’s PJM capacity coverage accounts for performance obligations, ELCC changes by technology, and the implications of resource type for capacity value. The evolving role of batteries and their impact on capacity dynamics is explored in Battery Standards Reshape Capacity Dynamics.

Why Noreva for PJM Capacity Forecasting

Noreva combines fundamentals-based modeling with trader-informed pricing inputs, a methodology no other PJM capacity data provider offers at this depth. Learn more about Noreva and the broader capacity services we offer. Our PJM coverage is built around five differentiators:

  • Fundamentals + transactional insights: We pair our in-house supply, demand, and policy modeling with live broker inputs and bilateral transaction data sourced through our sister company Karbone, which has 15+ years of capacity market trading and origination experience across the PJM footprint. Most data providers rely on fundamentals alone; Noreva ties PJM forecasts to where BRA outcomes, incremental auctions, and bilateral LDA positions are actually transacting.
  • Low / Base / High scenarios: Every PJM forecast ships with three calibrated scenarios, enabling risk teams, lenders, and developers to stress-test assumptions on thermal retirements, data-center load growth, interconnection queue timing, ELCC methodology changes, and post-price-cap dynamics without re-running the model.
  • Customizable scenario workbench: Clients can adjust load growth, retirement schedules, technology-specific ELCC factors, gas prices, LDA-specific assumptions, and CP performance inputs, then re-run PJM forecasts on demand across the RTO and all major LDAs.
  • Full data stack through Noreva Data Hub and API: Historical BRA clearing prices, daily marks, weekly forwards, LDA-level pricing (RTO, MAAC, EMAAC, SWMAAC, DOM, BGE, PSEG), UCAP derating assumptions, and 25-year merchant curves, all accessible through the Noreva Data Hub or directly via API for integration into project finance models, DSCR engines, and trading systems.
  • Advisory layer: Beyond data, Noreva supports clients with asset valuation reports, pro-forma reviews, PPA structuring, origination advisory, M&A support, and project benchmarking, drawing on Karbone’s direct PJM market experience.

Use Cases: Who Relies on PJM Capacity Forecasts

Capacity auction results directly influence whether new PJM projects are financeable. Noreva’s near-term BRA forecasts support bid strategy, commercial planning, and go/no-go decisions. The financial model implications of PJM’s capacity market for project developers are examined in Project Finance and PJM Auction Repercussions.

Debt sizing on PJM assets can be highly sensitive to capacity assumptions. The rigor of capacity price forecasting is central to base-case and downside-case analysis for credit and investment decisions, and Noreva’s scenario-based merchant curves are designed for that use.

Physical capacity positions, bilateral contracts, and broader commercial decisions require credible forward price references. Noreva’s PJM capacity data supports bid-band calibration, hedge strategy, and benchmarking.

Portfolio stress testing under low, base, and high capacity-price scenarios is a standard requirement for PJM-exposed portfolios. Noreva’s outputs are structured for integration into internal risk workflows.

Profile

Primary Need

Noreva Output

Developers & IPPs

Bid strategy, project planning, go/no-go decisions

Uncapped BRA forecasts

Lenders & Investors

DSCR stress tests, base and downside cases

Long-term merchant curves with scenarios

Traders & Originators

Forward pricing and commercial benchmarking

Near-term price forecasts and scenario ranges

Risk Teams

Portfolio exposure to clearing-price volatility

Low / base / high scenario outputs

PJM Capacity Market: Key Concepts

  • Resource adequacy: The goal of ensuring sufficient committed generation to meet load plus reserve margin.
  • Planning Reserve Margin (PRM): The reserve buffer procured through the market.
  • BRA: Base Residual Auction, PJM’s main forward capacity auction.
  • Capacity Performance (CP): Performance-based obligation for cleared resources.
  • ELCC: Capacity credit methodology for intermittent and storage resources.
  • UCAP: Unforced Capacity, the derated capacity basis for PJM procurement.
  • LDAs: Locational Deliverability Areas where local constraints can create capacity premia.
  • Capacity merchant curves: Long-dated forward capacity price curves used in valuation and underwriting.
  • Deliverable capacity and firm capacity: Locational and contractual attributes relevant to acceptance and value in PJM’s auctions.
  • Generation asset valuation: The broader valuation discipline that integrates capacity forecasts with energy revenues, costs, and policy incentives.

How PJM Compares to Other US Capacity Markets

US Capacity Market Design Comparison

Market

Auction Format

Procurement Horizon

Commitment Period

Locational Granularity

Performance Obligation

CAISO

Bilateral (no centralized auction)

Annual + monthly + 3 to 5yr (MTR)

Annual + monthly

System / Local RA zones

RA showings

ISO-NE

Descending clock, transitioning to prompt/seasonal at FCA 19

~3 years forward currently; prompt from FCA 19

Annual currently; seasonal from FCA 19

System + CT, ME zones

Pay-for-Performance

MISO

Bilateral + seasonal PRA

Annual

Four seasons

10 Local Resource Zones

ELCC + accreditation

NYISO

Spot + strip + bilateral

Seasonal, Monthly, Monthly-Spot

Summer / Winter capability periods

NYC, LHV, LI, ROS localities

UCAP derating + ICAP demand curve

PJM

Sealed-bid (BRA) + bilateral

~3 years forward

Annual

RTO + LDAs

Capacity Performance

SPP

Bilateral

Annual

Summer + Winter

System + sub-zones

ELCC & PBA

For broader market commentary across all US capacity markets, see Noreva’s Market Views.

Frequently Asked Questions: PJM Capacity

The PJM capacity clearing price is the auction outcome, expressed in $/MW-day, at which a specific BRA clears for a given delivery year. It can vary by year and by locational zone. Noreva provides forward forecasts of this price across major PJM zones.

PJM’s BRA is held approximately three years before the delivery year. That forward structure is one reason PJM capacity prices are so important to project development and lender underwriting.

ELCC reduces the credited capacity value of variable and storage resources relative to nameplate capacity. As a resource’s share of the supply stack grows, marginal ELCC values can decline, reducing expected capacity revenues per MW for new entrants.

Three consecutive BRAs have produced historically elevated prices. The 2025/26 BRA cleared at $269.92/MW-day RTO-wide, with BGE at $466.35 and DOM at $444.26. The 2026/27 and 2027/28 BRAs both cleared at the FERC-approved price cap across the RTO. Key drivers include data-center load growth expectations, thermal retirements, interconnection delays, and tightening reserve margins. Noreva’s analysis of these structural drivers is reflected in PJM Capacity Prices Reveal Structural Grid Stress.

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Access Noreva’s PJM Capacity Forecasts

Noreva’s PJM capacity datasets are structured for direct use in project finance, asset valuation, risk management, and commercial workflows. Coverage includes near-term BRA forecasts, long-term merchant curves, locational LDA analysis, and scenario-based pricing views.

To learn how Noreva’s PJM capacity forecasts can support your next underwriting case, transaction, or portfolio decision, book a demo with our team.