Team of Analysis Group Consultants Considers the Costs and Benefits of a Sub-Annual Market for the PJM Region
February 26, 2026
For PJM Interconnection – a regional transmission organization (RTO) that coordinates wholesale electricity in 13 states and the District of Columbia – a team from Analysis Group completed a study of its capacity market as part of an effort to meet future power needs. The study was conducted in response to an issue charge brought by Pennsylvania Governor Josh Shapiro. According to the charge, PJM’s existing annual market auction structure was “suboptimal.” Furthermore, in order to account for accelerated demand growth since the implementation of PJM’s 2007 capacity market, “there is a pressing need to implement a sub-annual capacity model, which could provide ‘near-term achievable improvements to the market’s ability to meet resource adequacy requirements in an efficient, least-cost manner.’”
The Analysis Group team included Principal Todd Schatzki; Vice President Joseph Cavicchi; Manager Phillip Ross; Associates Dan Dychala, Claire Paoli, and Kirill Rudov; and Senior Analysts Aditya Acharya and Sanjam Chhabra. The team evaluated the potential benefits of a sub-annual market given PJM’s evolving loads and mix of generation resources, and assessed tradeoffs in sub-annual market design options. It also conducted a quantitative analysis using a capacity market simulation model, which estimated changes in prices, payments, production costs, and reliability under current and long-run market conditions.
The team identified multiple benefits to PJM from adopting a sub-annual market, including more accurate pricing to improve short-term resource allocation and long-term resource investment, more accurate accounting for resource and system features, improved alignment of resource compensation with performance, and greater flexibility in adapting to market conditions.
The study follows previous work by Analysis Group on New England’s RTO which includes the adopted recommendation to develop prompt and seasonal markets.