PJM Bilateral Capacity Contracting: What Buyers Lose

PJM’s capacity auction has been the one public, dated calendar an equipment buyer could forecast against. Load clears, price prints, everyone reads the same number on the same day, and the transformer and switchgear orders behind it become predictable a year out. PPL’s chief executive has now said this is not where the generation is coming from. Reporting his August 7 earnings call, Utility Dive summarized the position this way: Sorgi “said he expects bilateral contracting will be the main pathway for adding generation.” PJM bilateral capacity contracting, in other words, rather than the auction.

He said it while PJM was at FERC asking permission to run a backstop reliability auction next month.

That is a procurement problem before it is a market-design problem. If he is right, the demand does not shrink. It moves off a published clearing cycle and onto developer and joint-venture timelines set by turbine slot availability and site control, and none of those get posted anywhere.

What PPL said about PJM bilateral capacity contracting

Vincent Sorgi, PPL’s president and chief executive, said it on the company’s second-quarter earnings call on August 7, 2026, alongside the turbine reservation news from PPL’s joint venture with Blackstone Infrastructure. Utility Dive carried it three days later. One point of hygiene before anyone quotes this further: the “main pathway” formulation is the publication’s summary of his position, not a verbatim sentence from the call transcript, and it is worth passing along as such.

The framing matters as much as the wording. He was not predicting a distant structural shift. He was describing how his own company intends to add generation, in a region where the alternative mechanism is scheduled for late September.

One utility CEO is not a market. But he runs a utility whose Pennsylvania service territory carries one of the largest data center pipelines in PJM, and he is describing the route his own capital is taking.

The PPL Blackstone gas turbine reservation agreements are not orders

The joint venture has a name that most of the coverage skipped: Invitium Energy, formed by PPL Corporation and Blackstone Infrastructure on July 15, 2025 to build, own and operate generation for Pennsylvania data centers under long-term energy supply services agreements.

What Invitium signed is “reservation agreements for more than 5 GW of combined-cycle gas turbines.” Not purchase orders. That qualification is the single most important sentence in the announcement and it is absent from nearly every headline written off it.

A reservation buys a place in a manufacturing queue. It does not commit the equipment, and it is not the same instrument as an order. We worked through the arithmetic on this in our read on pipeline versus contracted load, where one turbine manufacturer booked 20 GW of new gas equipment contracts in a quarter against 2 GW of actual orders. Roughly nine to one. Anyone rendering the PPL figure as 5 GW of turbines bought has made the error that framework exists to prevent.

The rest of the disclosure sets the clock. Those secured turbines represent up to $15 billion in potential investment through 2032, in which PPL holds a 51 percent stake rather than the whole thing. Units could come online as early as 2031. Invitium will likely announce at least one data center supply deal this year, and that conversion, not the reservation already signed, is the event worth watching. Sites in Pennsylvania are secured that could support up to 14 GW of new generation, and PJM has accepted about 5 GW of Invitium’s projects into its interconnection queue.

Batteries are the near-term tranche, and Sorgi put a limit on that too. “While the batteries are certainly the fastest to market, they’re also the easiest for the hyperscalers to embed in their designs and just make it part of the data center construction projects,” he said. He expects batteries on the system by 2029, with some owned directly by hyperscalers rather than by third-party generators like Invitium. Anyone sizing the near-term storage opportunity around independent developers should read that twice.

The turbine manufacturer is not named in any source we located. Neither are turbine delivery dates as distinct from in-service dates. We are not going to guess at either.

The capacity auction equipment demand signal is already conditional

Here is the part that has not been widely read, and it comes from PJM rather than from PPL.

The PJM Board’s July 27, 2026 executive summary on service during periods of insufficient resource adequacy states that incremental new Large Loads relative to the forecast used for the 2028/2029 base residual auction “will be excluded from the forecast used in future RPM auctions for the 2029/2030 Delivery Year and beyond unless and until there are new supply resources offered into an RPM auction in sufficient quantity to cover the new Large Load.”

Carry the trailing clause. This is a conditional exclusion, not a blanket one, and our own earlier records dropped that condition. The condition does not soften the consequence much, though. If incremental large load comes off the RPM demand curve until matched by new supply offers, then auction results stop describing large-load-driven equipment demand at all. For a distributor reading clearing prices to size inventory, that is a change of instrument, not a change of number.

Two signals, one from a utility CEO and one from the RTO’s own board, pointing at the same door.

A state regulator points the same way

New Jersey’s Board of Public Utilities makes three. Its research concluded that PJM “can no longer deliver reliable power at the lowest possible cost,” and its recommendations include moving from one capacity auction per year to a seasonal structure and offering longer-term contracting options.

Read that as market structure rather than as an affordability complaint. A state regulator asking for longer-dated contracts is asking for the same thing PPL is already doing and the same thing PJM’s own filings contemplate. The direction of travel is consistent across a utility, an RTO board, and a state commission, and none of them coordinated on it.

How to forecast large load generation procurement in PJM without an auction date

PPL hands over the replacement method in the same disclosure, which is a useful accident.

PPL Electric reported a 31.8 GW advanced data center pipeline for the second quarter of 2026, up 12 percent on the quarter. Inside that pipeline sit 11 GW of data centers that have signed electric service agreements. Under construction in the same territory: more than 6.5 GW, up from 5 GW in the first quarter. Three numbers, one utility, one quarter, and three completely different procurement meanings.

The 31.8 GW headline is an option book. The 11 GW under signed agreements is the near-term order book. The 6.5 GW under construction is steel being bought right now, and it is the only one of the three that describes work in the field this year. Pipeline to contracted runs about 2.9 to 1 in that stack, and the quarter-over-quarter move in the under-construction tier, 5 GW to 6.5 GW, is the number a distributor in that territory should be reading.

PPL also publishes its own discount rate, which almost nobody does. In Kentucky, Louisville Gas and Electric and Kentucky Utilities report an 11.6 GW data center pipeline plus 2.1 GW of manufacturing and other large load under development, against a probability-weighted projection of 3.7 GW of new load online by 2032. Depending on whether the non-data-center load is counted, that is the company discounting its own book to somewhere between a quarter and a third. PPL also notes the 3.7 GW is more than double what it predicted a year ago, so the discount is being applied to a rising base. A utility has no incentive to understate load it is planning to serve, which makes that self-applied haircut sturdier than most outside estimates of the same thing.

So the method is not complicated, and it is free. Pull the quarterly disclosures for the utilities in your territory, find the tier language, and forecast against the contracted and under-construction tiers rather than the headline. It is slower than reading one auction result. It is also the only public series left once PJM bilateral capacity contracting carries the volume, because bilateral deals do not print.

What to do before September 29

The backstop auction has not been approved. PJM filed the Reliability Backstop Procurement at FERC on July 31, 2026 in Docket ER26-3380-000, and asked for an order by no later than September 29, which is sixty days after filing. As of publication FERC has not acted. Keep that docket separate from ER26-3515-000, the Interim Resource Adequacy Service and Large Load Registry filing made two weeks later on August 13 with a requested effective date of October 12. PJM told FERC the two filings “are independent of each other.” Our read on the large-load curtailment rule works through the second one.

Watch the dates as arithmetic rather than as commitments. The offer submission window is planned to open on Commission acceptance, targeted for September 30, and to close three weeks later. Late October is a derived date that moves one-for-one with FERC’s docket clock, and PJM itself says it will post specific dates when it has them. Anyone building an equipment calendar on a fixed October close is building on a number that is not in the filing.

One correction worth carrying, because it circulates constantly: the $555 per MW-day figure attached to the backstop is not a raised price cap. It is a maximum willingness to pay applied to the MW-weighted average of levelized procurement cost across all selected offers over the full term, which PJM describes as a budget approach “not restricting Sell Offers to a hard price cap.” Individual offers can clear above it. The full backstop calendar and the shortfall arithmetic behind it sit in our utility procurement intelligence guide, and the April precedent for a record price summoning no new steel is in our read on the auction results.

For the next two quarters the practical posture is straightforward. Treat the backstop auction as a floor on visible demand rather than as the forecast. Track the contracted and under-construction tiers in utility quarterly disclosures for the territories you serve. And when a 5 GW headline lands, find out whether it describes a reservation or an order before it goes into anyone’s planning number, because those two words are separated by about seven years of lead time.

Related Reading

• PJM Capacity Auction Results: A Cap-Clear, No New Steel
• Data Center Load Pipeline vs Contracted: How to Discount It
• PJM’s Large Load Curtailment Rule

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When capacity procurement moves into bilateral deals, the public record gets thinner and the people who read filings early get a longer head start than they used to. The Feeder is our free monthly brief on what changed in grid equipment supply and policy, written for the people who have to turn it into a purchase order. Sign up here.