The Largest U.S. Grid Just Scheduled an Emergency Power Auction. What Does That Mean for a Building?
It means the people who run the grid are telling you, in their own words, that they cannot keep up. PJM, the operator for 13 states and Washington, D.C., has scheduled a one-time emergency auction this fall to buy extra power because its normal auctions came up short of what the region needs to stay reliable. For a building owner, that is not a distant utility matter. It is a plain signal that grid power is getting scarcer and more expensive, and that owning a share of your own power is moving from a nice-to-have to a form of insurance.
By Keith Reynolds | Publisher & Editor, ChargedUp!
What PJM Just Did
On July 28, the board of PJM Interconnection, the largest grid operator in the United States, directed its staff to hold a special one-time power purchase it is calling a Reliability Backstop Procurement. It will run from September 30 through October 21, with results released in early December. The word backstop is the tell. A backstop is what you reach for when the main system has failed to deliver, and that is exactly the situation. PJM's regular capacity auctions, the recurring markets where it lines up enough power to meet future demand, have twice come up short of the amount the region needs to stay reliable.
PJM runs the grid for about 67 million people across Delaware, Maryland, New Jersey, Ohio, Pennsylvania, Virginia, West Virginia, and parts of several neighboring states, plus the District of Columbia. When an operator of that size schedules an emergency purchase and offers power contracts stretching as long as 15 years to entice anyone who can build generation quickly, it is not a routine tune-up. It is a rescue.
The Numbers Behind the Alarm
Two figures explain the squeeze. PJM projects that large new power users, mostly data centers, will add about 70 gigawatts of demand by 2038. At the same time, roughly 15 gigawatts of older power plants have retired since 2022 and not been fully replaced, the PJM board wrote. A gigawatt is roughly the output of a large power plant, enough for several hundred thousand homes. So the region is being asked to add the equivalent of dozens of large plants' worth of demand while its existing fleet shrinks. Demand racing up while supply drifts down is the textbook recipe for higher prices and thinner reliability.
The price signal is already loud. PJM's most recent regular auction cleared at $325 for each megawatt of capacity per day, the highest level the market's rules allow, and still fell about 6,831 megawatts short of the reliability target. That was the second auction in a row to miss, the first time in PJM's history the entire region came up short. The cleared power alone was valued at $16.4 billion, a cost that ultimately flows toward customers.
How This Reaches a Building's Bottom Line
A capacity shortfall does not stay in a regulatory filing. It travels to the operating statement in two ways.
The first is price. The cost of the backstop auction will be spread across the utilities that serve load in each area, and from there onto customers, with each state deciding how the bill falls across different kinds of ratepayers. Commercial electricity is already climbing: average commercial prices were 5.8% higher than a year earlier in the latest federal data, according to the Energy Information Administration, with some states far higher. An emergency purchase of scarce power adds upward pressure on top of that. Every dollar of higher power cost pushes down net operating income, the money a building keeps after its expenses, and because a property's value is tied to that income, a heavier power bill can quietly lower what a building is worth.
The second is reliability. A region operating with slimmer reserves runs a higher risk of strain during the hottest and coldest days, exactly when a building most needs dependable power. PJM is careful to say a shortfall does not mean the lights will go out, only that it must operate with less cushion and more risk. For an owner, less cushion is itself a cost, because it raises the value of any building that can keep running on its own when the grid is stretched.
The Choice PJM Made, and Why It Matters for Planners
One detail deserves attention from anyone who plans or approves development. PJM's stakeholders rejected every proposal that would have let the operator simply switch off large customers like data centers during a shortage, a plan known as Connect and Manage. Instead, they chose to build a public registry of large loads that tells each state where the big demand sits and what reliability risk it carries. The burden of deciding how to handle that demand, and who pays for it, shifts to state regulators and local planners. The grid operator is handing communities the data and the decision.
For a planner, that registry is a new and useful instrument. For the first time there will be a standardized picture of where the largest power demands are concentrated by zone and state, which is exactly the information a community needs to weigh a new project against the grid it will lean on. It also confirms a direction this publication has tracked all year: the responsibility for managing large loads is landing on state and local government, not on the regional operator alone.
What an Owner Can Actually Do
The practical response follows directly from the signal. When the region's own grid operator is buying emergency insurance against a shortfall, the prudent owner buys some insurance too, and the form that takes is owning more of your own power.
Onsite solar paired with a battery lets a building generate and store a portion of its electricity, which lowers the amount it must buy during the expensive, strained hours. Simple controls that reduce a building's draw on command can earn payments through demand-response programs during exactly the peak events that led PJM to its emergency. Ordering electrical equipment early matters more than ever, because the same shortage driving the auction is lengthening the wait for transformers and switchgear. And for owners weighing a major project, the interconnection queue, the line to connect new load to the grid, is now long enough that designing to need less from the grid is often faster than waiting for the grid to expand.
The value math is unchanged and worth repeating. At an 8% capitalization rate, every $1,000 a building trims from its annual energy cost adds roughly $12,500 to its value. In a region where power is growing scarcer, savings a building controls itself are worth more than ever, because they do not depend on a grid that its own operator has just admitted is stretched.
The Bottom Line
An emergency auction is the grid equivalent of a warning light on the dashboard. PJM is managing the situation responsibly, and the lights are not going out. But the operator has now told the market plainly that demand is outrunning supply across 13 states, and that it will spend billions to paper over the gap in the near term. The owners who come through this period with their value intact will be the ones who read the warning for what it is, and who use the time to build a share of their own power before the next shortfall arrives.
Sources
https://mgrid.org/2026/06/30/pjm-stakeholders-endorse-555-mw-day-data-center-backstop-auction/
https://www.utilitydive.com/news/pjm-backstop-procurement-connect-manage-data-centers/824317/
