Rising energy supply costs and falling reserve margins in PJM have sparked concerns about customer affordability and reliability. High price signals have only led to a modest increase in generation supply even in the face of rapid load growth. As solutions are explored, the need for better planning and for customer-accountable entities to overcome market uncertainty has led to consideration of expanding utility-owned generation in PJM.
In this analysis prepared for Exelon, authors Jeff Plewes, Michael Kline, and Oliver Stover evaluate potential financial and reliability benefits of better planning and more utility-owned generation in PJM. Specifically, it compares two scenarios for PJM Delivery Year 2028/29: a business-as-usual scenario and an alternative scenario in which utilities had planned and brought new resources online before mid-2028.
Key findings:
- Utility-owned generation saves PJM customers between $10 and $20 billion (depending on whether capacity price collars are continued) during the single year analyzed. This includes the net cost of the additional generation.
- The risk of load shedding caused by supply shortages falls 85% with the addition of utility-owned generation.
- A more diverse resource portfolio that is better aligned with state policy targets is achieved, including over 6 GW of additional battery storage capacity.
The findings illustrate how well-planned, utility-owned generation could save customers billions of dollars, while increasing reliability and ensuring a more policy-aligned and diverse portfolio of capacity resources.
