Future Impact on Commercial Refrigeration Energy Costs

Future Impact on Commercial Refrigeration Energy Costs

PJM Capacity Auction Results: Impact on Commercial Refrigeration Energy Costs

The recent PJM capacity auction for 2025-2026 has significant implications for businesses relying on commercial refrigeration systems. Energy-intensive operations, including supermarkets, food processing plants, and cold storage facilities, should prepare for potential cost increases.

Key Auction Outcomes

  • Capacity charges will surge to $269.92 per MW daily, a 900% increase from the current $28.92 per MW daily.
  • PJM secured 134,672 MW of power for the 2025-2026 period year from the 135,694 MW made available during the auction. Supply was only 1,000 MW over demand.
  • PJM has already approved 38,000 MW of power additions to the RTO interconnection, but external issues have prevented them from connecting to the RTO.  PJM needs to do everything it can to connect this power to the grid and keep electricity prices from further increases.
  • Consumers may face up to a 29% increase in retail power bills starting mid-2025.

Factors Driving Price Increases

Several factors contribute to the rising energy costs, which will affect commercial refrigeration operations:

  • Generation retirements reducing available power supply.
  • Projected increase in peak demand, requires more.
  • Slow replacement of retired generation plants.
  • Extreme weather modeling requirements by FERC, impacting reliability pricing.

Impact on Commercial Refrigeration

Businesses operating commercial refrigeration equipment should anticipate:

  • Energy cost increases of 1-4 cents per kWh for commercial customers was reported by Kokosing Solar.
  • Higher operating expenses for walk-in coolers, freezers, and display cases.
  • Increased importance of energy-efficient refrigeration systems.
  • Greater need for regular maintenance and optimization.

Mitigation Strategies for Refrigeration-Dependent Businesses

To offset potential price hikes, companies can:

  1. Implement energy efficiency projects focused on refrigeration systems.
  2. Shop for electricity contracts early to secure better rates.
  3. Invest in energy-efficient commercial refrigerators and freezers.
  4. Explore demand response programs to reduce peak energy consumption (REMOVE- difficult with refrigeration)
  5. Consider on-site renewable energy solutions, such as solar panels.

Future Outlook

An upcoming auction in December 2024 for the 2026/2027 delivery year may bring some relief if additional power generation is connected to the grid. If the market is short on adding new generation expect prices to become even higher.  However, businesses should proactively plan for higher energy costs and optimize their commercial refrigeration operations accordingly. By focusing on energy efficiency and smart energy management, companies can mitigate the impact of rising electricity prices on their refrigeration-dependent operations.   . 

More Information

­• https://kokosingsolar.com/pjm-commercial-energy-increase/
• https://www.pjm.com/about-pjm/who-we-are  

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