What ELCC is Telling Us About PJM’s Capacity Crunch
The PJM marketplace has been simultaneously one of the most gridlocked and most dynamic over the past year. Rising electricity demand, long interconnection delays, record-breaking capacity auction prices, and growing concern about large new loads like data centers have pushed PJM into near-constant reform mode. Over the course of 2025, the grid operator launched an emergency Reliability Resource Initiative, proposed changes to surplus interconnection and capacity interconnection rights, imposed a price collar on the capacity auction, and conducted a fast-track stakeholder process to address large load additions. This year, the grid operator has been moving at breakneck speed to implement federal co-location rules while simultaneously pursuing both near-term and long-term market fixes to address large load additions and long-standing market inefficiencies.
The common thread running through all the issues we are seeing develop at PJM over the last 18 months is a growing concern about the region’s ability to maintain resource adequacy. Load demands are increasing at a rate that is outpacing the development of new generation resources.
And at the center of that discussion is a technical but critical concept: Effective Load Carrying Capability (ELCC). ELCC is a model-based methodology used to determine how much “capacity value” a resource receives in PJM’s capacity auction.
The ELCC model affects how different resources are valued in capacity auctions by measuring resource performance in a forward-looking model while incorporating historical weather and resource performance data. The modeling is complex, but it answers a simple question: During the hours when the grid is under the most stress, how much can this resource reliably contribute?
Small changes in ELCC assumptions can significantly shift capacity outcomes and price signals, and future uncertainty can dampen investment signals for new resource entry. To explore the effects of different future ELCC scenarios in PJM, United partnered with Ascend Analytics to create a custom ELCC model which mirrors PJM’s ELCC results. This would allow us to investigate how adjustments to model inputs would affect PJM’s ELCC performance outputs for the different generation resources contributing to the PJM grid system. Ascend’s analysis provided these top line findings:
1. Future ELCC values will probably look different from the 2026/27 auction, and most are expected to go down.
In simple terms, most types of power plants and resources are likely to receive a lower “capacity credit” in the future. That’s largely because the grid is adding more variable resources like solar and wind. As more of these resources come online, each individual project tends to contribute a little less toward reliability during peak stress hours.
So, as we build more clean energy, the amount each project is credited for in the capacity market may shrink as the overall mix becomes more variable.
2. Solar and Storage face significant uncertainty.
PJM modeled ELCC values for the next 10 years under a single resource assumption. But real-world outcomes will depend heavily on what actually gets built. The approach did not explore how changes in the future generation mix would affect ELCC values. This is particularly true of batteries, an asset which has lagging development in PJM. From the analysis that Ascend provides, we can see this uncertainty playing out, with broad possible ELCC ranges for 4-hour and 4-hour batteries across resource scenarios. There’s also a data limitation problem. As of late 2025, PJM has under 500 MW of operational battery capacity — a small dataset compared to other markets like ERCOT and CAISO, which have over 16 GW and 14 GW of battery capacity, respectively. Limited operating history makes it harder for the model to confidently value new technologies — especially storage.
3. More Storage boosts the capacity contributions of Solar and Demand Response.
As more batteries are added to the grid, they shift midday solar generation into evening hours — when PJM faces its highest reliability risk. This allows solar resources to contribute more to avoiding reliability shortfalls. Interestingly, storage boosts the ELCC value of Demand Response, which occurs because as batteries shift solar generation into the later hours of the evening, Demand Response is able to provide grid support for a longer period of time while batteries help make up some of the shortfalls in hours where they previously provided less grid relief. Batteries will also help reinforce this trend over time, by helping Demand Response to provide more “firm” grid relief over time, improving performance data and leading to higher ELCC ratings as more batteries are deployed.
4. Solar and Storage reinforce each other.
As noted above, increased storage deployment boosts the ELCC value of solar—and the reverse is also true. There have long been expectations that the concurrent development of solar and batteries would increase the availability for energy injection of both technologies. The projected data around ELCC accreditation sees this expectation play out in the sensitivities of these technologies to one another. There should be a long-term expectation that as solar and batteries are built out together, especially in hybrid configurations for generation facilities, that larger data sets for performances of both technologies will also lead to their increased ELCC accreditation over time.
5. Timing Matters for Demand Response.
Demand response ELCC is particularly sensitive to its delivery window. When high-risk hours move outside traditional performance windows, ELCC values can decline unless program rules evolve to match changing grid conditions.
This underscores a broader reality: ELCC outcomes are not static. They are shaped not only by technology characteristics, but also by system evolution, weather patterns, operational rules, and real-world performance data.
The Big Picture
As PJM confronts record auction prices, large load additions, and ongoing policy reform, ELCC will continue to play a central role in shaping investment signals. Capacity market outcomes depend not just on how much supply exists, but on how that supply is accredited.
Understanding how ELCC could change under different future scenarios is essential to designing policies that support reliability while sending clear signals for new development. With the PJM region preparing to undertake a wholesale evaluation of market incentives, the role of ELCC and the need for greater certainty to drive needed investments must remain front and center to the debate.
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