Capacity is a component of electricity supply (generation) charges that ensures there are enough suppliers of energy to meet the demand on the grid at any given time. Capacity costs can comprise a minimal amount to up to 25% of electricity supply costs. Capacity prices are determined each year by an auction that takes into account the potential demand and load, new power generation, and any renewable energy or energy efficiency initiatives.
PJM, Ohio’s regional electricity grid operator, posted results from the 2025/2026 capacity auction, also known as the Base Residual Auction, or BRA, and costs have significantly increased from the current capacity year of 2024/2025. Every PJM region settled at or above $270.35 / MW-day. For AEP, AES, and FirstEnergy regions, the capacity prices have increased by 820%. In Duke, the increase is 367%. There are strategies to mitigate these cost increases. With this pricing set to start in the summer of 2025, now is a great time to consider strategies such as Demand Response/PLC Management programs and/or solar to reduce peak demand during the capacity “coincident peak” hours.
If you would like more information on how your electricity bills will be affected by the increase in capacity pricing and how your business may be able to mitigate these costs, please email Claire Wilson ([email protected]).
