PJM Trims Near-Term Load Forecast On Stricter Data Center Vetting, Economic Outlook

By Ethan Howland of UtilityDive

The PJM Interconnection scaled back its load growth forecast through 2032 compared to last year’s estimates, but the largest U.S. grid operator expects electric demand to surge past those expectations through the next decade, according to an annual report released Wednesday. PJM expects its summer peak load will grow by 3.6% a year to about 222 GW by 2036, up from its previous 3.1% forecast. The increase totals about 65.7 GW over the next 10 years.

In a change that affects PJM’s upcoming capacity auction, the grid cut its peak demand forecast for the summer of 2028 by 4.4 GW, or 2.6%. It also lowered its forecast for the summer of 2027 by about 4 GW, reducing a reserve margin shortfall for that capacity year to about 2.6 GW.

PJM’s reduced near-term load forecast was driven by updates to electric vehicle and economic forecasts and stricter vetting of planned data centers and large loads, according to the grid operator. 

Those changes reduced PJM’s peak load forecast for this summer by 0.7% from large loads, 0.5% from economic activity and 0.1% from EVs compared to the last long-term load forecast report, PJM said in a press release.

PJM uses its annual load forecast for transmission planning and to help determine how much capacity it should buy in its capacity auctions. PJM’s next base capacity auction, for the 2028/29 delivery year, is set to start June 30.

PJM’s downward revisions to its load forecast don’t indicate weakening demand for electricity, according to Jefferies equity analysts.

“We read the load revisions as reflective of pushouts/delays, NOT weakness in demand,” they said in a note Wednesday. “While we expect a 3-4 GW improvement in shortfall for [the] next two auctions, [the] market will still fall short — an accelerated backstop procurement is the way to go.”

Even if PJM secures an additional 10 GW in a procurement process, capacity prices will “comfortably clear” at the maximum price of about $530/MW-day in PJM’s next two capacity auctions, the analysts said.

Compared to last year’s forecast, PJM increased its 2031 summer peak load forecast for the Dayton Power and Light zone by 27%, or 1 GW, the Commonwealth Edison zone by 16.5%, or 3.7 GW, and the PECO Energy zone by 5.1%, or 0.5 GW.

In the same year, it cut its forecast for the American Electric Power zone by 10.4%, or 3.7 GW, the American Transmission Systems Inc. zone by 8.1%, or 1.2 GW, and the Pennsylvania Electric zone by 6.1%, or 0.2 GW.

The PJM zones with the strongest 10-year average annual summer peak growth forecasts are: PPL Electric at 6.4% (up from 5.9% last year); Dominion at 5.4% (down from 6.3%); AEP at 5.3% (down from 5.5%); DPL at 5.2% (up from 1.2%); and ComEd at 3.9% (up from 1.6%), according to PJM’s report.

After PJM stakeholders failed to agree last year on reforming the grid operator’s processes for adding large loads to its system, PJM’s board is expected to “outline its determination of a path forward on the [Critical Issue Fast Path] issues in the next few weeks,” PJM said in the news release.

Reforms may include changes to PJM’s process for considering large load forecasts.