PJM, the largest power market in the United States, is falling behind other regions in the deployment of renewable energy and battery storage, particularly when compared with ERCOT in Texas. Delays in bringing new capacity online are maintaining the region’s reliance on fossil fuels and increasing costs for consumers, according to an analysis published by the Institute for Energy Economics and Financial Analysis (IEEFA) on August 31.

The contrast is particularly significant at a time when renewable generation is expanding across most of the United States. The latest projections from the US. Energy Information Administration (EIA) show that wind and solar are expected to account for 93.7% of the increase in US. electricity generation through the end of 2027, contributing 186.4 million MWh of the projected 198.8 million MWh increase.

PJM stands out as one of the main exceptions to this trend. The operator serves all or parts of 13 Midwestern and Mid-Atlantic states and the District of Columbia, and its process for connecting new generation has resulted in delays or cancellations affecting thousands of megawatts of planned solar and wind projects.

IEEFA also points to market rules that have discouraged the development of battery storage, limiting another resource that could facilitate greater renewable integration. As a result, although the EIA expects wind and solar generation to increase in PJM, nearly three-quarters of the region’s generation growth through 2027 will come from natural gas and coal.

The situation contrasts sharply with ERCOT, which operates the power market serving about 90% of electricity demand in Texas. The EIA projects that generation in ERCOT will increase by 42.4 million MWh through 2027, with all of that growth supplied by wind and solar.

Texas combines renewables and batteries to meet record demand

The differences between the two markets have also become evident during periods of exceptionally high electricity demand this summer.

On July 22, ERCOT reached a new peak demand record of 91,089 MW, exceeding the previous record set in August 2023 by 5,508 MW. Despite the higher demand, real-time prices during the peak hour averaged just $29.11/MWh. During the previous record in 2023, prices had climbed to $4,477.12/MWh in the peak hour.

The expansion of solar and battery storage played a significant role. During the July 22 peak hour, solar generated 28,712 MW, equivalent to 31.5% of total demand. Later, as solar output declined, batteries injected more than 10,000 MW into the ERCOT system for more than an hour, meeting between 10% and 14% of total demand.

ERCOT currently has 21,864 MW of installed battery storage capacity, with roughly another 16,000 MW expected to come online by the end of 2027. California has also accelerated storage deployment, with CAISO reporting 17,125 MW of installed battery capacity as of August 1.

PJM remains dependent on coal and gas

PJM is following a markedly different trajectory. According to the projections cited by IEEFA, around 44% of the region’s expected increase in electricity generation through 2027 will come from aging coal-fired power plants, even though some of these facilities have experienced substantial declines in output over the past decade.

The analysis highlights the Keystone and Conemaugh plants in Pennsylvania, whose units entered service between 1967 and 1971. Their annual capacity factors have fallen from around 80% in the late 2010s to roughly 20%-30% over the past three years. However, continued uncertainty surrounding PJM’s project queue and sharply higher capacity payments have given the region’s coal plants a temporary reprieve.

The consequences are also economic. IEEFA estimates that consumers across PJM will pay almost $50 billion over the next three years as a result of the recent surge in capacity costs. Higher capacity prices are intended to encourage the construction of new generation, but the analysis notes that it will take years to determine whether those incentives actually result in sufficient new capacity.

The contrast with Texas was again evident during the early July heatwave. On July 2, PJM demand reached a record 168,158 MW, surpassing the previous peak of 165,563 MW set in 2006. During the peak hour, real-time electricity prices climbed to almost $2,000/MWh and remained above $200/MWh from 11:10 a.m. until 9:30 p.m.

IEEFA argues that greater solar generation and battery storage would likely have helped reduce those price spikes, as has occurred in ERCOT and California.

The divergence is particularly significant given the broader outlook for the US. electricity sector. The EIA expects wind and solar generation to grow faster than gas and coal in nine of the country’s 11 major power markets. Across those nine regions, wind and solar generation is projected to increase by 161 million MWh through 2027, while combined coal and gas output is expected to decline by 63 million MWh.

Against this backdrop, PJM is emerging as an outlier in a US. power transition increasingly driven by renewable energy and battery storage, while ERCOT illustrates the opposite trajectory through the rapid expansion of wind, solar and storage capacity.