Electric Rates to Rise Due to Inflated Price at Capacity Auction

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Electric Rates to Rise Due to Inflated Price at Capacity Auction

‘Capacity’ price spike signals ComEd supply price will spike in June 2025

The Impact of Electricity Capacity Auctions & How to Hedge with Solar

Energy prices are set to rise sharply in 2025, and the recent PJM capacity auction results make it clear that businesses need to prepare for higher costs. Fortunately, solar energy offers a solution by allowing you to hedge against unpredictable energy prices and secure long-term savings. Let’s dive into why the recent capacity auction results are a warning signal and how investing in solar can protect your business from volatile energy markets.

What Happened in the Latest PJM Capacity Auction?

On July 30th, 2023, PJM Interconnection—the operator of the power grid covering a vast region from the Midwest to the East Coast, including northern Illinois—announced staggering price increases in its capacity auction. This auction determines how much consumers will pay to ensure there’s enough reserve electricity available when demand spikes, such as on hot summer days when air conditioning usage soars.

For the period of June 2025 through May 2026, capacity prices for the majority of PJM’s region surged by 830%, skyrocketing from $28.92 per megawatt-day (MW-day) to a record-breaking $269.92 per MW-day. Some areas, like the Baltimore and Dominion zones, saw even higher prices, which will significantly impact electricity bills.

Why does this matter? Capacity costs, which account for around 20% of your electricity supply price, are about to soar—leading to a noticeable increase in your monthly energy costs.

Why Energy Prices Are Set to Increase

The sharp rise in capacity costs is driven by a combination of factors: decreasing supply, increasing demand, and PJM’s over-reliance on fossil fuel power plants, which have proven unreliable during extreme weather events. Unfortunately, this means that a substantial portion of the capacity is being supplied by gas and coal plants, with clean energy sources like solar and wind making up just 1% of the total.

As a result, businesses in northern Illinois can expect their electricity supply prices from Commonwealth Edison (ComEd) to rise significantly starting in June 2025. ComEd estimates an increase of about 1.5-2.0 cents per kilowatt-hour (kWh), which could add up to $7.50 to $10.00 extra per month for a business using 500 kWh of electricity.

How Solar Can Help You Hedge Against Rising Energy Costs

With electricity rates becoming more unpredictable, investing in solar energy now can help businesses hedge against these rising costs. By generating your own power with solar panels, you can reduce or even eliminate your reliance on the grid, securing stable energy prices for the long term.

Here’s why solar is a smart investment:

  • Predictable Energy Costs: Once you install solar panels, you can generate a portion or all of your electricity at a fixed cost, making you less vulnerable to price spikes like the one caused by PJM’s capacity auction.
  • Long-Term Savings: While electricity prices continue to rise, solar energy allows you to lock in lower rates, saving your business money for years to come.
  • Environmental and Financial Benefits: With clean energy incentives like the Investment Tax Credit (ITC) and potential state-level grants, solar not only protects you from price hikes but also offers tax credits and other financial advantages.

Solar: A Sustainable Way to Safeguard Against Market Fluctuations

While the PJM grid operator struggles to fix outdated policies and transmission issues, businesses don’t have to wait for regulatory changes to impact their energy bills. Solar offers immediate relief and long-term sustainability by reducing reliance on fossil fuels and grid electricity.

At Commercial-Solar.org, we specialize in helping businesses transition to solar with tailored solutions that meet your energy needs and financial goals. Whether you’re looking to lower your operating costs, boost sustainability efforts, or protect your bottom line from rising energy prices, we can guide you through the process of going solar.

Contact us today to learn more about how solar can protect your business from future energy price increases and provide long-term stability in an ever-changing market.