Reagan Blackmon

The latest PJM load forecast report shows the grid operator scaling back its near-term load growth expectations compared with last year’s outlook, driven in part by stricter vetting of planned data centers and updated economic assumptions. However, PJM still projects longer-term demand growth over the next decade, with peak load forecasts rising overall. The revised numbers could influence capacity planning and upcoming auction results, as the region continues to balance increasing demand with grid reliability and planning challenges. https://lnkd.in/eHJmG_2C

7

The energy equipment supply chain isn't recovering. It's restructuring. Here's where lead times stand right now for transformers and critical grid equipment: 🔴 Large Power Transformers — 128 to 210 weeks (2.5 to 4 years) 🔴 Generator Step-Up Units — 144+ weeks 🟠 Distribution Transformers — 80 to 120 weeks 🟠 High-Voltage Circuit Breakers — 100 to 151 weeks 🟠 Switchgear & Panelboards — 30 to 65 weeks 🔴 HV Direct-Current Cable — 24+ months (offshore: potentially a decade) For context, pre-2020 lead times for most of this equipment were 4 to 8 months. What changed? Wood Mackenzie estimates a 30% shortfall in large power transformers nationally. Demand for generator step-up units alone is up 274% since 2019. Data centers, renewable build-out, EV infrastructure, grid hardening, and aging assets are all competing for the same constrained supply. Transformer costs have risen 4 to 6x since 2022 — and you're still waiting years for delivery. New domestic manufacturing capacity is coming — Hitachi, Siemens, and Eaton have committed nearly $2B to new U.S. plants — but most won't come online until 2027 or 2028. The implication for any mid-market company with CapEx exposure to energy infrastructure: the procurement decision and the financing decision now have to happen at the same time. Waiting to engage capital until equipment is sourced is no longer a viable strategy. If your company is navigating long-cycle equipment purchases and you need a capital partner who understands the asset — let's talk. #EquipmentFinancing #DealFlow

3

This is a great thing for PNM employees (me!), customers and New Mexico. There is a growing amount of misinformation being generated. The realty, supported by facts, is that customers remain protected and receive benefits. Please reach out if you have questions!

25

1 Comment

So PJM capacity prices hit the price cap again, which was a surprise to no one who has been observing the market. As we've written about extensively, the only solution to the cost problem while also getting new supply online is to channel revenues to new entry without providing revenues to the rest of the supply stack. A few notes: * To those talking about extending the price caps: you fundamentally cannot implement a price cap below the cost of new entry and then ask why new entry isn't coming into the market * To those listening to what the IPP and generation associations are saying: they have a clear incentive to keep capacity prices high, so you need to read their comments through that lens. * To those assessing the future revenue potential of generation assets in PJM: you need to be aware that it is politically untenable for prices to rise to the cost of new entry and stay there. * To those blaming datacenters: load growth was coming and this was going to happen no matter what...datacenters just accelerated the underlying reality. Even with sufficient new supply to meet demand, capacity prices STILL have to rise to the level needed to support the new supply. SUMMARIZING: high capacity prices are both necessary to incentivize new generation and unavoidable in an era of load growth. And it is politically unpalatable to allow prices to stay high, but economically impossible for them to stay low. The only solution is to provide direct financial support to new entry outside of the capacity market. https://lnkd.in/gXKXe4Ck

53

3 Comments