A 15-year guarantee? Inside the "Emergency" Capacity Auction
Three different federal judges overruled the Trump administration offshore wind stop work orders, allowing work to resume. The government failed to demonstrate a national security risk so urgent that construction must cease. PJM filed an amicus brief in support of the project, saying delays could “cause irreparable harm to the 67 million Americans served by PJM…” It noted “national security benefits in the form of a stronger and more reliable electric grid.”
The Administration and a bipartisan group of governors held a meeting and called on PJM to schedule a one-time emergency capacity auction to dedicate supply resources for 15 years for data center loads. Data company officials and PJM were not invited.
This approach creates two auction structures and risk starving the existing structure, especially if the 2nd auction is more lucrative.
Two features may be useful, though: 1) a focus on new marginal supply resources; and 2) a longer term for fixed capacity prices so investors can better assess profitability.
The Federal Energy Regulatory Commission will need to bless this proposal, and in the interim, this issue will remain highly political.