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Public story · 2026-08-17 · high
SemiAnalysis says PJM's model ignores that winter air lets gas plants produce up to 25% more power, inflating capacity costs by billions.
Why now: SemiAnalysis published this breakdown as PJM's capacity prices for the next two auction years are already locked in and feeding site-selection math across the region.
PJM's capacity market overpriced grid reserves for two straight auctions, according to a SemiAnalysis review of the grid operator's own reserve study.
Capacity prices in the region jumped from $28.92 to $270-333 per MW-day. Every AI data center weighing a PJM site is pricing power off that number.
The study applies summer temperature derates to gas turbines. It skips the fact that colder, denser winter air lets those plants produce up to 25% more power, per SemiAnalysis.
It also still weights outage risk on 2013-2022 failure data, even though more than 400 of PJM's roughly 700 gas plants winterized after Storm Elliott.
SemiAnalysis puts the waste at $6.7 billion in the 2025/26 auction and $4.9 billion in 2026/27. The same reliability target needed 14 to 800 fewer megawatts of reserve.
If PJM reruns the numbers with winter derates and post-Elliott failure rates, capacity prices will drop well below $270 per MW-day. If they don't, something other than reliability math is setting the price.
Each link below shares sources, entities, or timing with this story.
Shared entities / Shared topic / Earlier coverage
Both cover Capacity, PJM; overlapping topics (capacity, data); earlier Capacity coverage from 2026-05-11.
Shared entity: SemiAnalysis / Same source domain / Earlier coverage / Tension
Both cover SemiAnalysis; reported by the same outlet (newsletter.semianalysis.com); earlier SemiAnalysis coverage from 2026-08-08.
SemiAnalysis uses Claude Code / Shared entity: SemiAnalysis / Earlier coverage
Linked by a graph relationship (SemiAnalysis uses Claude Code); both cover SemiAnalysis; earlier SemiAnalysis coverage from 2026-03-15.
SemiAnalysis uses Claude Code / Shared topic / Tension
Linked by a graph relationship (SemiAnalysis uses Claude Code); overlapping topics (apply, data); pushes against this story (against).
Linked by a graph relationship (SemiAnalysis uses Claude Code); overlapping topics (been, data); pushes against this story (but).
Linked by a graph relationship (SemiAnalysis uses Claude Code); overlapping topics (context, decision); pushes against this story (but).
SemiAnalysis uses Claude Code / Shared topic
Linked by a graph relationship (SemiAnalysis uses Claude Code); overlapping topics (been, context, decision).
Shared entity: SemiAnalysis / Shared topic / Earlier coverage
Both cover SemiAnalysis; overlapping topics (context, semianalysi); earlier SemiAnalysis coverage from 2026-08-16.