A modelling error that cost $11.57 billion
PJM undercounts the plants it already has by about 4GW, and the emergency auction it has scheduled repeats the assumption.
3 minDePIN Compute & Bandwidth
PJM is the largest electricity market in the United States, serving 66 million people, and it runs the capacity auctions that decide what generation gets built. SemiAnalysis argues its Reserve Requirement Study understates existing plant capacity by roughly 4 gigawatts, and puts the cost of that error to ratepayers at $11.57 billion across two auctions.
Two omissions
- Cold, dense air makes gas plants stronger generators — by up to 25% in winter — but the model does not credit that while still applying winter failure penalties.
- By 2024, 400 of PJM's roughly 700 gas plants had invested in winterisation after Storm Elliott. The risk calculation has not been updated to reflect it.
The arithmetic follows from operating close to the limit. In the 2025/26 auction, 135.7GW cleared at $270 per MW-day where the analysis argues $135 was achievable — $6.7 billion. In 2026/27, capacity cleared at the $329 price cap against a possible $230, a further $4.9 billion.
The same assumption now sits under a Reliability Backstop Auction scheduled for 30 September to 21 October, targeting 6.8GW of new capacity. Corrected for the modelling, SemiAnalysis puts the real requirement at 3.0GW.
The structural risk it flags is not the megawatts but who pays. Contracts would run to 2043 against demand that has not materialised, with no committed counterparties and no agreed state-by-state cost allocation. If the large loads do not arrive, residential ratepayers absorb the difference.
For anyone siting compute in the region, this is the number underneath the power price — and it is being set by a study, not by physics.
Retold from SemiAnalysis. This is a summary in our own words; follow the link for the original reporting.