​A 1 MW, 4-hour battery earned a modeled $73/kW-month in PJM in May 2026. Regulation contributed $56/kW-month, Real-Time energy arbitrage $12/kW-month, and capacity $5/kW-month.

Real-Time TB4 spreads averaged $389/MW-day across May, 106% above May 2025. A record-breaking heat wave on May 18-20 drove that average up: daily spreads on those three days ran more than three times the rest-of-month average. The jump came from a few extreme days, not a broadly hotter month.

Key takeaways

• A 1 MW, 4-hour battery earned a modeled $73/kW-month. Regulation still anchors the stack at $56/kW-month, carried from Modo Energy's Q1 proxy until Q2 filings land in late July.
• Real-Time TB4 spreads averaged $389/MW-day, up 106% year-over-year. This was weather driven: a few extreme days lifted the mean.
• The highest spreads were found in Eastern PJM, in line with the region’s highest temperatures. Virginia (DOM) led at $898/MW-day, up 118%, with Baltimore (BGE) and Washington DC (PEPCO) next. Western zones such as ComEd rose too, but cleared far lower: ComEd reached $281/MW-day, less than a third of Virginia's spread.
• Real-Time prices spiked to $2,152/MWh on May 18 while Day-Ahead cleared just $54/MWh. May 2026 logged 21 hours above $200/MWh, versus 2 in May 2025.
• Solar generation grew 35% year-over-year, deepening midday troughs. The month posted 137 hours below $20/MWh, widening the daily range from the bottom.

A record May heat wave, not a structural shift, drove the spread

Real-Time TB4 spreads averaged $389/MW-day in May, up from April's $368/MW-day and 106% above May 2025's $189/MW-day. Day-Ahead spreads ran $234/MW-day, 78% above last May.

The cause was a sharp, early-season heat wave. Philadelphia hit 98°F on May 19, its hottest May day on record, beating a 96°F mark from 1962. Washington and Baltimore both reached 97°F. Three straight days set temperature records, May 18 through 20.

May’s largest scarcity event came on May 18. Around 11:40am, Real-Time prices spiked to $2,152/MWh while Day-Ahead prices for the same hour cleared just $54/MWh. The monthly Day-Ahead high was $400/MWh, set on May 19.

The heat was an eastern event, not a system-wide one. Chicago, in western PJM, peaked at 87°F on May 17 and fell to 59°F by May 20. These were milder conditions than the Mid-Atlantic.

A second real-time spike followed at month-end. Daily TB4 reached $1,061/MW-day on May 26 and $868/MW-day on May 27, nearly matching the heat days. This one was not heat driven: temperatures sat in the low 80s, and a stormy morning ramp lifted Real-Time near $828/MWh on May 27.

Across the month, evening prices ran about 63% above May 2025, with the 7-8pm hours clearing near $91/MWh versus $56 last year.

The Mid-Atlantic led because that is where the heat was

Every PJM zone saw Real-Time TB4 rise year-over-year, but the Mid-Atlantic moved furthest.

Virginia (DOM) led at $898/MW-day, up 118%. Baltimore (BGE) followed at $643/MW-day, up 124%, then Washington DC (PEPCO) at $624/MW-day, up 89%.

Persistent transmission constraints between eastern load centers and western generation widen price separation during scarcity. The heat loaded those constraints precisely where they bind hardest. Western zones such as ComEd rose, but by far less.

Higher solar penetration and lower net exports reshaped the generation stack

Mean hourly demand reached 85.6 GW, up 5.5% from 81.1 GW in May 2025, lifted in part by the heat.

The supply mix addressed load differently than a year ago. Solar generation grew 35%, with mean hourly output rising from 3.2 to 4.4 GW. Gas eased about 5%, nuclear rose 3%, and wind ran flat.

Net exports shrank by 72%. PJM averaged just 1.1 GW of net exports in May, down from 3.9 GW a year earlier, as the region relied on imports to cover the higher load.

Increased solar generation during midday pulls daytime troughs lower. The month posted 137 hours below $20/MWh, up from 122 a year earlier, and 21 hours above $200, against just 2. Cheaper troughs widen the daily range from the bottom while the heat stretched it from the top.

Regulation still anchors the revenue stack

Six months past the October 2025 redesign, regulation remains elevated. May cleared $97/MWh, down from April's $104/MWh but 3.4 times May 2025's $29/MWh.

Synchronized and primary reserves stayed low, unaffected by the redesign.

The 5-minute profile shows the same lift across the day, with the higher baseline between ramp hours adding as much as the ramp spikes themselves.

Mid-Atlantic zones still capture the highest spreads in the pipeline

Filtering planned BESS projects through current TB spreads, the Mid-Atlantic dominance carries into the development pipeline. Planned batteries in PEPCO and BGE would clear the highest cumulative TB4 spreads in PJM.

Both operating and planned batteries in the corridor would capture roughly double the spreads of projects further west under current pricing.

What does May tell us?

May's volatility was weather driven. A handful of extreme days, led by the record May 18-20 heat wave. In turn, this drove a 106% year-over-year jump in Real-Time spreads, while monthly-mean temperatures ran roughly flat.

The structural earner is still regulation, holding at its post-redesign level six months on. Energy arbitrage adds to the stack when weather is extreme, reflecting PJM’s upside for BESS units available in the RT market during scarcity events.