TWITTER_THREAD

NiyerEnergy argues PJM’s capacity market flipped from roughly a 10-year low in…

2026-02-02 · 02:13 UTC ·NiyerEnergy ·3 min read

Brief

NiyerEnergy frames PJM’s latest capacity auction results as a market-design and resource-adequacy shock, not just a story about AI data centers. The thread argues that the jump from floor-like pricing in 2024/2025 to the cap in 2025/2026 reflects several overlapping changes hitting at once: load growth, Dominion’s roughly 6 GW shortfall, thermal retirements, and major revisions to how reliability is measured through ELCC-based accreditation. In the author’s view, PJM’s coal-to-gas evolution left plenty of installed thermal capacity on paper, but newer reliability accounting suggests the system has been much tighter than previously recognized. That means today’s price spike may partly be a delayed recognition of longstanding scarcity rather than a sudden new imbalance. The thread’s main analytical point is that when the market is sitting within a narrow 5-7 GW margin, many different factors can be blamed for the entire jump, and the real issue may be how marginal ELCC interacts with pay-as-cleared auctions.

Why it matters

NiyerEnergy argues PJM’s capacity market flipped from roughly a 10-year low in the 2024/2025 auction to the literal price cap in 2025/2026, calling it a regime shift rather than a simple continuation of data-center-driven load growth.

Key details

  • The thread attributes the price shock to multiple concurrent factors: some data center and native load growth, Dominion re-entering the market with an estimated 6 GW deficit, thermal retirements, and rule changes that shifted reliability accreditation toward marginal ELCC and from UFORd to ELCC for thermal resources.
  • The author says PJM’s apparent thermal capacity stack looked adequate under the old framework, with the system seeming tight but still safe until around 2031, but the new accreditation rules imply PJM may actually have been in a reliability “danger zone” for much of the last decade while capacity prices sat near the floor.
  • The post claims the common narrative that blames data centers alone is incomplete because PJM is operating on the edge and any 5-7 GW swing in supply or demand could plausibly explain nearly all of the cost increase; the author specifically points to queue delays and coal retirements as other major contributors.
  • NiyerEnergy’s core critique is that marginal ELCC may be reasonable for valuing resource additions and retirements, but its interaction with PJM’s pay-as-cleared capacity auction is producing dysfunctional outcomes in pricing and market design.
Cleaned source text

title: @NiyerEnergy: I'm going to start PJM posting. Do not be alarmed. I will speak in a form of eff... (Thread, 9 tweets)

author: NiyerEnergy

content_type: twitter_thread

published: 2026-02-02T02:13:00+00:00

source_url: https://x.com/NiyerEnergy/status/2018145598818373919

word_count: 644

Thread by @NiyerEnergy

Tweet 1/9

I'm going to start PJM posting. Do not be alarmed. I will speak in a form of effectively gibberish for 99.95% of the general population. It's likely a form of insanity, the best of us have gone too deep and never returned. The changes between the auctions of 2024/2025 and 2025/2026 are relevant to our present moment, as it was a regime shift from floor to peak in the capacity markets. Feel free to disagree with these takes, if you have the knowledge! /1

Tweet 2/9

You can see here the big moment I'm talking about. We shift from lowest it's been for like 10 years (e.g. retire capacity) to the literal cap in one year. A LOT happened in that year, way more than the early ramp of data centers! /2

Tweet 3/9

I will give you 10 good ones: 1. Some datacenter and native load growth 2. Dominion re-enters the market, with like a 6 GW deficit 3. Thermal retirements 4. Shift to marginal ELCC, changing the way resources are considered reliable. 5. Shift from UFORd -> ELCC for thermals 6. On

Tweet 4/9

There are a lot of moving parts. Do not be afraid, the PJM market cannot hurt you unless you are one of 67 million Americans. Basically you can see over the past 15 years, PJM has been doing a coal-> gas push. If you look at the installed capacity, is more than enough thermals

Tweet 5/9

In the old world, you would take off another slice based on outages and maintenance and other stuff. We are getting tight but still in the safe zone until like 2031 ish. We are not in that world! /5

Tweet 6/9

After all the edits and shifts, not only are we tight, but actually if we backcast things, the new rules argue we actually have been in the danger zone for the last 10 years when the market was effectively below the floor we've set on cap markets. Renewables pretty much don't

Tweet 7/9

The trad narrative is to blame data centers for existing (and they do!) but the floor to peak is like 7 GWs and we are apparently right on the edge. Anything that changes supply/demand more than 5-7 GWs could be "attributed" 100% of the cost increases. Queue delays, coal

Tweet 8/9

My personal view is that marginal ELCC makes sense to value additions and retirements, but fundamentally it's interaction with pay as cleared auctions is leading to dysfunction. "Marginal price signals" are a sacred form in the mind of the priestly market designers, but it's

Tweet 9/9

Anyway views my own, feel free to rip me apart here I'm still learning. DMs are open if you want to debate market design. /Done

Posted: 2026-02-02T02:41:00.000Z

Engagement: 15 likes, 0 retweets, 3 replies

Discussion (7 replies)

@Ember421 (4 likes)

My view is that the market system exists to get the resources online that are actually needed to provide the energy and capacity demanded. But given our broader economic system, this basically boils down to mechanisms to get stuff financed.

@Richard15322800 (3 likes)

What's been interesting to me in this winter storm was the feedstock issue. As you have coal->gas, now gas prices/demand are much more tightly correlated to demand/gen. Where once you had to fuels, you now just have increasingly one (and that one is harder to store)

@ChickenMon3000 (1 likes)

Sounds like we shouldn’t have gotten rid of coal

@BateGerald (1 likes)

All of this is downstream of the ix queue which exists to shred capital In a functioning system, the queue is a pipeline that allows supply to respond to changes in price, and get development going. Look at the queue, barely 20% of projects actually make it through

@tobe_duru (1 likes)

"welcome to the PJM rabbit hole"

@oldF500cfo

What is crazy is that PJM is sitting on one of the largest gas field in the world. They should be encouraging more cracking plants to consume ethane and use methane for power generation. Also need to put interruptible loads like crypto mining in place.

@markovschainsaw