​The first phase of PJM’s Regulation market overhaul went live in October - for batteries, this is the biggest market design change since RegD was launched in 2012.

The redesign simplifies the market into a single Regulation signal, replacing the previous dual-signal setup. It also changes how resources are scored and adjusts clearing intervals and requirements that define how batteries earn revenue in this ancillary service market.

The goal? Make the market more efficient and address long-standing issues with energy neutrality, performance fairness, and over-procurement.

​Early data shows massive opportunity for batteries, with elevated clearing prices and sharp volatility. Regulation prices in October averaged $129/MW/h - more than 2.5 times higher than Energy prices and over 230% above September levels.

1. PJM’s Regulation redesign creates short-term upside, long-term squeeze

Phase 1 of PJM’s Regulation market redesign went live on October 1, 2025. The following changes define this first stage of the overhaul, with Phase 2 expected next October.

Signal

• ​PJM is merging RegA and RegD into one bidirectional Regulation signal.
• This removes the artificial cap that generally limited batteries to the RegD portion.
• In the short term:
• Batteries benefit - the market size doubles from ~320 MW to ~750 MW.
• More batteries will participate - especially as PJM’s queued fast lane projects come online.
• In the long term:
• Batteries will dominate the Regulation market with low-cost bids.
• More competition → lower clearing prices → lower revenues.

Performance scoring

• ​Old system: 33% weighting for accuracy, delay, and precision.
• New system: Single precision-based metric.
• Batteries are the best performing technology by the precision metric, compared to slower thermal units like coal or hydro.
• Batteries gain an edge as precision-based scoring reduces share of eligible thermal capacity

Clearing and Commitment

• Intervals shorten from hourly → 30 minutes.
• Batteries gain flexibility:
• Can adjust bids more often based on state of charge.
• Easier to combine Regulation with energy arbitrage.

Regulation Requirement

• ​PJM’s Regulation needs stay fairly stable, though ramp vs. non-ramp hour differences narrow.
• PJM will now update requirements more frequently to match system conditions.
• As renewables grow, frequency fluctuations increase → slightly raising Regulation demand.
• But, overall market size increase is incremental, not transformational.

All of the above are Phase 1 changes that took effect on October 1, 2025.

Phase 2, scheduled for October 2026, will split the bidirectional signal into separate products for either direction - RegUp and RegDown. While the market impact is unclear, the change could allow batteries to bid more strategically based on state-of-charge and directional capability.

2. The new Regulation signal is faster than the old RegA, but slower than the old RegD

The new Regulation signal is faster than the old RegA signal - capturing intra-hour variability - but slower than RegD. This should result in fewer deep cycles and smoother dispatch for batteries.

All RegD resources - primarily batteries and peakers - were required to update their telemetry points to RegA to continue participating. Otherwise, a resource would be unable to receive or follow the new signal and therefore couldn’t clear or be compensated in the Regulation market.

The redesign also retired RegD’s higher mileage multiplier, replacing it with a single, normalized mileage ratio that smooths payments and eliminates the former RegD premium.

3. Big paydays for Regulation providers as prices top $100/MW/h post-redesign

In October 2025, monthly average Regulation prices reached $129/MW/h - the highest in over three years. And for the first time since 2022, prices decoupled from Energy prices.

The spike likely reflected short-term scarcity, as some fleets re-certified and operators were required to recalibrate offers for the new scoring system. This transition may have tightened supply, as some resources likely failed to re-qualify or complete telemetry updates in time - reducing competition to provide Regulation and contributing to higher prices observed in October.

​Regulation remains PJM’s most valuable ancillary product - at least for now.

​A 1 MW battery providing Regulation for 12 hours a day in October would have earned about $48/kW-month at $129/MW/h prices, compared to $20/kW-month in June at $55/MW/h prices - a 2.4x increase.

4. October saw significant price volatility, especially during ramp hours

A closer look at October data shows extreme volatility in Real-Time 5-minute Regulation prices, particularly during morning and evening ramp periods - even though PJM’s Regulation requirements remained largely unchanged before and after the redesign.

Real-Time 5-minute prices spiked as high as $750/MW/h around 8am and $1,800/MW/h near 6pm. In comparison, daily average prices for January through September 2025 peaked between $66 - 83/MW/h.

For BESS operators, that volatility creates strong near-term returns, but also signals a market still adjusting to new clearing dynamics. Once participation stabilizes and more capacity competes to provide Regulation, these ramp-hour squeezes will fade, reducing the opportunity window for outsized returns.

Bottom line

PJM’s redesign creates more room for batteries to compete and capitalize on volatility. For batteries already online, staying on top of such market design changes can unlock massive revenue opportunities if they are able to react quickly.

But once the market adapts and more batteries come online, returns will tighten as Regulation becomes saturated.

For developers and operators - Regulation remains a strong first play, before strategies pivot toward arbitrage and capacity markets.