CALGARY, Alberta (June 17, 2026) — Enverus Intelligence® Research (EIR), a subsidiary of Enverus, the leading energy data analytics platform, has published its latest report, At the Cap, Below CONE | Why PJM’s Capacity Market Needs a Reset, which examines the capital-cost and capacity-price environment required to support new combined-cycle gas turbine development in PJM.
The report finds that capital costs for new CCGTs have increased from approximately $1,000/kW before 2024 to $2,000-$3,000/kW today, materially changing project finance feasibility. Under EIR’s base-case assumptions, merchant project returns in PJM fall below 10% at $2,000/kW or higher, while debt service coverage ratios become tight under current market conditions.
EIR’s analysis also indicates that long-duration bilateral contracts could improve financeability for some projects, particularly at a $2,000/kW capital cost. However, at $2,500/kW and above, economics remain challenged even when capacity prices are held at PJM’s current cap for the first 15 years of a project’s life. A separate sensitivity on a $2,500/kW plant suggests capacity pricing of approximately $500/MW-day would be required to bring project returns and DSCRs into commercially financeable territory, above PJM’s current cap of $333.44/MW-day.
“PJM needs new dispatchable capacity, but the economics of building it have moved faster than the market design. At today’s capital costs, even strong operating assumptions and elevated capacity prices leave a narrow path to financeable new gas development. The implication is that bilateral contracts and capacity-market parameters will need to reflect the true cost of new entry, or developers may continue to favor existing assets over greenfield projects,” said Scott Wilmot, report author and principal analyst at EIR.
Key takeaways:
- Capital costs for new CCGTs have increased from roughly $1,000/kW before 2024 to $2,000-$3,000/kW today.
- Under EIR’s base case, a 1 GW PJM CCGT with a July 2028 COD, 75% capacity factor and $30/MWh spark spread sees returns fall below 10% at $2,000/kW or higher.
- In a high-capacity-price case with PJM capacity prices held at the current cap for the first 15 years, $2,000/kW projects approach bankable territory, while projects above $2,500/kW remain challenged.
- For a $2,500/kW newbuild CCGT, EIR estimates approximately $500/MW-day in capacity pricing would be needed to support commercially financeable economics.
- EIR expects many data center projects could be built off-grid if PJM’s auction cap is not raised to reflect the current cost of new entry.
FIGURE 3 | PJM Capacity Price Sensitivity – $2,500/kW Newbuild CCGT
Note | DSCR and Project return for a $2,500/kW PJM CCGT across capacity price scenarios of $100-$600/MW-day. All other assumptions consistent with Figure 1.
Source | Enverus Intelligence® Research
EIR’s analysis pulls from a variety of products including Enverus ONE.
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About Enverus Intelligence® Research
Enverus Intelligence ® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. Enverus is the most trusted, energy-dedicated SaaS company, with a platform built to create value from generative AI, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 95% of U.S. energy producers, and more than 40,000 suppliers. Learn more at Enverus.com.
