After two decades of relative stability, PJM says its power system is entering a fundamentally different era, and the region’s market design may need to evolve with it. In a new whitepaper, PJM describes a convergence of structural forces driving the grid into “disequilibrium”: an unprecedented surge in demand tied to large-load data centers and broader electrification, accelerated retirements of dispatchable generation driven by policy and economics, and supply chain/permitting constraints that are stretching the time it takes to build new resources.

The result is a shift from managing surplus to managing scarcity – a shift PJM expects could persist because new generation “simply cannot be built fast enough” to keep up. PJM also highlights why this transition is more complex than the coal-to-gas shift of the last decade: construction timelines have effectively outgrown the market’s three-year forward signal, capital costs have jumped, and investors increasingly require revenue certainty amid frequent rule changes and policy swings.

Perhaps most striking is PJM’s warning about a “credibility trap.” Scarcity prices may be economically rational, but price spikes can trigger political intervention that weakens the very investment signal needed to restore reliability. PJM’s conclusion is clear: resolving this will take structural choices, with reliability as the “North Star.”

Read more: Powering Reliability Through Market Design