​In December, the PJM 2027/2028 capacity auction cleared 6.6 GW below its reliability target and reached its administratively-set price ceiling ($333.44/MW-day). This marked the second consecutive auction to clear at a price cap, following the 2026/2027 auction. Together, these outcomes signal a market where electricity demand is growing faster than supply.

​Data centers are driving the imbalance. PJM's 2025 Long-Term Load Forecast projects 32 GW of peak load growth through 2030. Data centers account for 94% of that increase. Generation retirements, interconnection delays, permitting, and other constraints have left supply unable to keep pace.

PJM and elected policymakers have responded with multiple strategies: emergency backstop auctions to procure new capacity, large load reforms that pair curtailment risk with bring-your-own-new-generation (BYONG) incentives, and new interconnection possibilities to get projects online faster. Most of these proposals require FERC approval and remain months from implementation.

For battery developers, PJM's reforms could open new opportunities. Backstop auctions, BYONG incentives, and new interconnection pathways will reward projects that can reach commercial operation quickly. The same is true for solar, but the math is less favorable. Standalone solar needs significantly more nameplate capacity than gas or batteries to provide the same reliability value to the grid, making it a less likely beneficiary for many of these reforms.

Key takeaways:

• The Trump administration and PJM governors proposed a backstop auction with 15-year contracts to fund $15 billion in new generation (7.5 GW under capex assumptions of $2,000/kW) paid for entirely by data centers. PJM has separately proposed preemptively triggering its own backstop auction to close the shortfall.
• PJM has also proposed that large loads (50 MW or greater) that do not bring their own generation should face curtailment during reliability events. Conversely, large loads that participate in BYONG will be rewarded with shorter interconnection wait times.
• The Reliability Resource Initiative (RRI) has selected 11,793 MW of shovel-ready projects which PJM folded into Transition Cycle 2 of the interconnection process. PJM aims to fast track additional projects through Surplus Interconnection Services (SIS), the Expedited Interconnection Track (EIT), and Capacity Interconnection Rights (CIR) transfers.

What backstop auctions are being proposed?

Two parallel backstop mechanisms emerged in January 2026. Both aim to procure capacity beyond what the regular auction delivers.

The government’s proposal

The Trump administration, joined by a bipartisan coalition of PJM governors led by Pennsylvania's Josh Shapiro, issued a "Statement of Principles" on January 16, 2026.

The proposal calls for a one-time emergency backstop auction with 15-year capacity contracts to support construction of approximately $15 billion in new dispatchable generation. Data centers would bear 100% of procurement costs through take-or-pay obligations.