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Jul 31, 2025 · 32m · catalyst

PJM and the capacity crunch

Steve Piper · 19m spoken Shayle Kann · 6m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of Catalyst, host Shayle Kann and S&P Global's Steve Piper analyze the historic price spikes in PJM's capacity market, examining how compressed auction timelines, data center growth, and nationwide grid reliability shifts are driving up power costs.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shayle holds 22.3% of the talking time here. How this is scored →

Shayle as informed peer 5.0 Guest teaching 3.2 Guest disagreement 0.2 Shayle pushing back 1.0
05100:0010:0020:0030:000:02–2:17 · Shayle as informed peer 0/10 Episode Preview and the PJM Capacity Auction Introductory preview clips and commercial advertisements. As this is an ad read and teaser segment, all scores are zero.2:22–10:40 · Shayle as informed peer 6/10 Shayle Kann on Grid Pressures and PJM Significance Kann establishes his deep familiarity with wholesale electricity markets, noting the ERCOT exception and clarifying how capacity auctions merge retirement-prevention bids with new-build generation. Piper provides clear foundational explanations in a collaborative tone.10:41–17:45 · Shayle as informed peer 6/10 Explaining PJM's Historic Capacity Price Spike Kann highlights the compression of the auction schedule and notes that prices hit the regulatory ceiling. Piper walks through the regulatory delays and the price trajectory from historical lows to record highs.17:49–28:01 · Shayle as informed peer 7/10 Mid-Episode Commercial Break: Clean Power and Grid Solutions Following the mid-roll ads, Kann presses Piper on the underlying resource adequacy risks and challenges the surprisingly low participation of demand response given high clearing prices. Piper explains gas turbine lead times and capacity accreditation uncertainties.28:02–32:14 · Shayle as informed peer 6/10 Nationwide Grid Trends and Rising Retail Consumer Costs Kann prompts a nationwide perspective and summarizes the inevitable retail rate impacts. Piper delivers a comprehensive breakdown of how ISOs across the country are derating capacity values while increasing target reserve margins.0:02–2:17 · Guest teaching 0/10 Episode Preview and the PJM Capacity Auction Introductory preview clips and commercial advertisements. As this is an ad read and teaser segment, all scores are zero.2:22–10:40 · Guest teaching 3/10 Shayle Kann on Grid Pressures and PJM Significance Kann establishes his deep familiarity with wholesale electricity markets, noting the ERCOT exception and clarifying how capacity auctions merge retirement-prevention bids with new-build generation. Piper provides clear foundational explanations in a collaborative tone.10:41–17:45 · Guest teaching 4/10 Explaining PJM's Historic Capacity Price Spike Kann highlights the compression of the auction schedule and notes that prices hit the regulatory ceiling. Piper walks through the regulatory delays and the price trajectory from historical lows to record highs.17:49–28:01 · Guest teaching 4/10 Mid-Episode Commercial Break: Clean Power and Grid Solutions Following the mid-roll ads, Kann presses Piper on the underlying resource adequacy risks and challenges the surprisingly low participation of demand response given high clearing prices. Piper explains gas turbine lead times and capacity accreditation uncertainties.28:02–32:14 · Guest teaching 5/10 Nationwide Grid Trends and Rising Retail Consumer Costs Kann prompts a nationwide perspective and summarizes the inevitable retail rate impacts. Piper delivers a comprehensive breakdown of how ISOs across the country are derating capacity values while increasing target reserve margins.0:02–2:17 · Guest disagreement 0/10 Episode Preview and the PJM Capacity Auction Introductory preview clips and commercial advertisements. As this is an ad read and teaser segment, all scores are zero.2:22–10:40 · Guest disagreement 0/10 Shayle Kann on Grid Pressures and PJM Significance Kann establishes his deep familiarity with wholesale electricity markets, noting the ERCOT exception and clarifying how capacity auctions merge retirement-prevention bids with new-build generation. Piper provides clear foundational explanations in a collaborative tone.10:41–17:45 · Guest disagreement 0/10 Explaining PJM's Historic Capacity Price Spike Kann highlights the compression of the auction schedule and notes that prices hit the regulatory ceiling. Piper walks through the regulatory delays and the price trajectory from historical lows to record highs.17:49–28:01 · Guest disagreement 1/10 Mid-Episode Commercial Break: Clean Power and Grid Solutions Following the mid-roll ads, Kann presses Piper on the underlying resource adequacy risks and challenges the surprisingly low participation of demand response given high clearing prices. Piper explains gas turbine lead times and capacity accreditation uncertainties.28:02–32:14 · Guest disagreement 0/10 Nationwide Grid Trends and Rising Retail Consumer Costs Kann prompts a nationwide perspective and summarizes the inevitable retail rate impacts. Piper delivers a comprehensive breakdown of how ISOs across the country are derating capacity values while increasing target reserve margins.0:02–2:17 · Shayle pushing back 0/10 Episode Preview and the PJM Capacity Auction Introductory preview clips and commercial advertisements. As this is an ad read and teaser segment, all scores are zero.2:22–10:40 · Shayle pushing back 1/10 Shayle Kann on Grid Pressures and PJM Significance Kann establishes his deep familiarity with wholesale electricity markets, noting the ERCOT exception and clarifying how capacity auctions merge retirement-prevention bids with new-build generation. Piper provides clear foundational explanations in a collaborative tone.10:41–17:45 · Shayle pushing back 1/10 Explaining PJM's Historic Capacity Price Spike Kann highlights the compression of the auction schedule and notes that prices hit the regulatory ceiling. Piper walks through the regulatory delays and the price trajectory from historical lows to record highs.17:49–28:01 · Shayle pushing back 3/10 Mid-Episode Commercial Break: Clean Power and Grid Solutions Following the mid-roll ads, Kann presses Piper on the underlying resource adequacy risks and challenges the surprisingly low participation of demand response given high clearing prices. Piper explains gas turbine lead times and capacity accreditation uncertainties.28:02–32:14 · Shayle pushing back 0/10 Nationwide Grid Trends and Rising Retail Consumer Costs Kann prompts a nationwide perspective and summarizes the inevitable retail rate impacts. Piper delivers a comprehensive breakdown of how ISOs across the country are derating capacity values while increasing target reserve margins.

speaking balance: gold is Shayle, purple is the guest (3 minute bins)

0:00 · Shayle 28.3% · guest 71.7%0:00 · Shayle 28.3% · guest 71.7%3:00 · Shayle 52.2% · guest 47.8%3:00 · Shayle 52.2% · guest 47.8%6:00 · Shayle 11% · guest 89%6:00 · Shayle 11% · guest 89%9:00 · Shayle 26.5% · guest 73.5%9:00 · Shayle 26.5% · guest 73.5%12:00 · Shayle 13% · guest 87%12:00 · Shayle 13% · guest 87%15:00 · Shayle 11.5% · guest 88.5%15:00 · Shayle 11.5% · guest 88.5%18:00 · Shayle 38.4% · guest 61.6%18:00 · Shayle 38.4% · guest 61.6%21:00 · Shayle 9.4% · guest 90.6%21:00 · Shayle 9.4% · guest 90.6%24:00 · Shayle 20.2% · guest 79.8%24:00 · Shayle 20.2% · guest 79.8%27:00 · Shayle 13.2% · guest 86.8%27:00 · Shayle 13.2% · guest 86.8%30:00 · Shayle 22.1% · guest 77.9%30:00 · Shayle 22.1% · guest 77.9%
Sharpest disagreement ▶ 21:17 Piper reframes blackout alarmism to economic impact

Piper gently rejects the media's tendency to frame resource adequacy solely as imminent blackouts, reframing the capacity crunch instead as a massive economic cost event.

 Hardest push from Shayle ▶ 26:44 Kann challenges demand response underperformance

Kann pushes Piper to explain why fast-deploying demand response resources failed to scale in the 2025 auction despite extraordinarily lucrative clearing price incentives.

 Biggest teaching moment ▶ 30:45 Piper outlines nationwide ISO accreditation reforms

Piper educates listeners on how post-storm regulatory reviews nationwide have systematically reduced reliability accreditation across thermal and renewable assets.

 Shayle holds their own ▶ 16:34 Kann highlights the capacity auction price cap

Kann demonstrates sharp market literacy by identifying that the clearing price was artificially constrained by a cap and would have cleared even higher otherwise.
the scores for every segment, with the reasoning behind each
ChapterTopicShayle as informed peerGuest teachingGuest disagreementShayle pushing backWhy
Episode Preview and the PJM Capacity Auction 0000 Introductory preview clips and commercial advertisements. As this is an ad read and teaser segment, all scores are zero.
Shayle Kann on Grid Pressures and PJM Significance 6301 Kann establishes his deep familiarity with wholesale electricity markets, noting the ERCOT exception and clarifying how capacity auctions merge retirement-prevention bids with new-build generation. Piper provides clear foundational explanations in a collaborative tone.
Explaining PJM's Historic Capacity Price Spike 6401 Kann highlights the compression of the auction schedule and notes that prices hit the regulatory ceiling. Piper walks through the regulatory delays and the price trajectory from historical lows to record highs.
Mid-Episode Commercial Break: Clean Power and Grid Solutions 7413 Following the mid-roll ads, Kann presses Piper on the underlying resource adequacy risks and challenges the surprisingly low participation of demand response given high clearing prices. Piper explains gas turbine lead times and capacity accreditation uncertainties.
Nationwide Grid Trends and Rising Retail Consumer Costs 6500 Kann prompts a nationwide perspective and summarizes the inevitable retail rate impacts. Piper delivers a comprehensive breakdown of how ISOs across the country are derating capacity values while increasing target reserve margins.

Statements from this episode (8)

Prediction Not checkable as stated
Kann: Consumer and Enterprise Electricity Rate Spikes Are Just Beginning
“The alarm bells on price and resource adequacy are ringing louder and louder, and the downstream effects on consumers and enterprises in terms of rates are starting to show, and I think we're just at the beginning.”
Shayle Kann Jul 31, 2025 ▶ 2:35
Assertion Supported
Piper: PJM now procures capacity just one year in advance
“They had to pause the auctions for a number of years, and despite efforts to catch up and get back to that four-year forward schedule, they essentially fell so far behind that now they are in a situation where they are procuring capacity just for the next reli…”
Steve Piper Jul 31, 2025 ▶ 11:08
Assertion Supported
Piper: PJM capacity prices jumped eightfold to around $270 per MW-day
“The pricing in the early twenty-tens was maybe around a hundred dollars a megawatt day, additional sort of reforms and changes that PJM made. Depress the price even more at those high reserve margins. I think we got down as low as 30 dollars a megawatt day, ba…”
Steve Piper Jul 31, 2025 ▶ 15:47
Assertion Supported
Kann: Grid backlogs make building power plants in one year impossible
“So all the problems that our listeners are well aware of with things like interconnection timelines make it really difficult to, you know, start a de novo project today that's going to come online. Not to say, not really difficult, literally impossible to brin…”
Shayle Kann Jul 31, 2025 ▶ 20:21
Assertion Supported
Piper: PJM capacity spikes add $20 to $30 to monthly bills
“Customers in Ohio and Pennsylvania and Maryland, they're getting these notices. Their bills are going up by 20 or 30 bucks a month, you know. Starting this year, as a result of last year's capacity auction price, this capacity auction that, that was announced …”
Steve Piper Jul 31, 2025 ▶ 21:52
Assertion Supported
Piper: Combined-cycle gas plant lead times now stretch to 2030–2032
“The run on gas turbines is such that you can't deploy very many of them next year, or even two years from now. If you want to build the more complex combined cycle generation systems They're talking about 2030, 20 32.”
Steve Piper Jul 31, 2025 ▶ 23:25
Assertion Supported
Piper: PJM accredits 100MW of solar as just 8 to 10MW
“If you bring a hundred megawatts of gas generation, we count that as about 70 megawatts of reserve contribution. If you bring a hundred megawatts of solar, we may count that as eight to 10 megawatts of reserve contribution. You know, very, very conservative, m…”
Steve Piper Jul 31, 2025 ▶ 25:25
Prediction Not checkable as stated
Piper: Capacity incentive prices can only go up across US power markets
“If you think about reducing those assessments of reliability contribution, but increasing your planning reserve targets, you're saying, well, we want more, but what generators bring is less then You know, it's a very strong signal to bring new generation to ma…”
Steve Piper Jul 31, 2025 ▶ 31:20
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