​December 2025 built on the revenue conditions seen earlier in the year, with elevated Regulation prices, strong capacity market signals, and winter-driven price volatility shaping PJM battery opportunity.

Real-Time TB1 spreads averaged $88/MW/day, 61% higher than December 2024, while Regulation prices averaged $66/MW/h, almost 2x last winter’s levels. Compared to last December, higher fuel costs lifted baseline power prices, while colder-than-average weather introduced more frequent Real-Time scarcity.

Together, these factors produced consistent trading opportunities for batteries.

A hypothetical 1 MW, 4-hour battery could have earned up to $28/kW-month, stacking value across Real-Time arbitrage, Regulation, and capacity markets.

Today, PJM batteries still earn most of their revenues from ancillary services, with Regulation and frequency response contributing the bulk of earnings.

But larger, longer-duration batteries moving through the queue are increasingly positioning around capacity market revenues, with energy arbitrage emerging as residual upside once ancillary services saturate. In that case, winter volatility, higher fuel costs, and congestion patterns play a much larger role in shaping returns.

Read last month’s report here.

For any questions, reach out to deeksha@modoenergy.com.

Real-Time prices were more volatile than Day-Ahead, creating higher arbitrage opportunity

December's intraday profile shows a consistent divergence between Day-Ahead and Real-Time prices, most visible during morning heating ramps and early evening lighting peaks.

The clearest example came December 14-16, when a mid-month cold push across the Mid-Atlantic and Northeast tightened operating conditions and triggered PJM cold weather alerts.

Real-Time prices spiked sharply, with five-minute intervals approaching $600/MWh, while Day-Ahead prices remained far lower.

This was not a single-event story.

Similar Real-Time price spikes occurred on December 8, with five-minute prices reaching $400/MWh during the morning ramp.

Beyond individual events, December 2025 Real-Time daily price profiles showed higher volatility than December 2024. Some days exhibited more dramatic dual price peaks during morning and evening ramps.

Day-Ahead markets consistently underestimated ramp risk, leaving value in Real-Time.

These price divergences translated directly into arbitrage opportunity.

Real-Time TB1 spreads averaged $88/MW/day in December, nearly flat from November's $89/MW/day but 61% higher than December 2024's $55/MW/day.

Real-Time spreads consistently exceeded Day-Ahead opportunity throughout the month, with Day-Ahead TB1 spreads averaging $65/MW/day.

Demand grew, price outcomes were more dispersed

December 2025 saw 19% higher net load than November.

Average daily net load increased from 83 GW in November to 99 GW in December, reflecting colder conditions and increased electric space heating and lighting demand.

Despite the higher net load, Real-Time prices stayed at similar levels to November, as more generators returned from maintenance outages. That additional demand was met by more gas and coal capacity running.

Prices were higher and more volatile than last winter

The comparison to December 2024 reveals a different dynamic. At similar net load levels, December 2025 prices were both higher and far more dispersed. This points to a combination of higher fuel costs and tighter thermal flexibility across PJM.

December’s arbitrage opportunity came from frequent intra-hour price divergences. Higher net load lifted the price floor, but it was the wider range of Real-Time outcomes that created repeatable trading windows for batteries.

This is the second edition of Modo Energy's benchmark report for battery revenues in PJM. Subscribers to Modo Energy's Research can read on to learn more about:

• How ramp-hour Regulation spikes created outsized opportunities for qualified batteries
• How higher fuel costs lifted baseline power prices
• Where congestion patterns shifted across zones in December, creating widely varying arbitrage opportunities for operating and planned batteries

Fuel costs raised the floor, not just peaks

Gas and coal delivered prices moved higher compared to last winter, raising the marginal cost of generation across PJM.

Northern Appalachian coal averaged $62/ton in December 2025, up 27% from $49/ton last December.

Natural gas prices averaged $3.8/MMBtu in December 2025, up from $2.8/MMBtu in December 2024. That $1/MMBtu increase translates to roughly $7-10/MWh higher marginal costs for combined-cycle gas turbines.

Higher fuel costs lifted the power price floor in December 2025. For batteries, that meant more hours with actionable spreads. The combination of higher baselines and cold weather-driven scarcity spikes created consistent daily trading opportunities.