PJM Hit a 20-Year Demand Record as Wind and Solar Subsidies Expire

The One Big Beautiful Bill’s construction-start deadline for wind and solar projects expired at midnight on July 4, 2026, closing 35 years of federal subsidy support for new clean energy capacity. The same weekend, PJM Interconnection — the largest power grid in the United States, serving 67 million people — triggered its third federal emergency order of 2026, approached its 20-year all-time demand record, and saw wholesale electricity prices spike above $2,000 per megawatt hour. During the crisis, natural gas supplied 44% of PJM generation. Coal supplied 19%. Solar supplied 6%. The policy and the infrastructure are now pointing in opposite directions.

The July 4 Deadline Closed 35 Years of Federal Wind and Solar Subsidies — and the Industry’s Response Was Uneven

President Trump signed the One Big Beautiful Bill Act on July 4, 2025, setting a one-year window for wind and solar developers to begin construction and retain eligibility for the technology-neutral Clean Electricity Production Credit under Section 45Y and the Clean Electricity Investment Credit under Section 48E. Projects that cleared the July 4, 2026 construction-start deadline can take up to four years to complete and remain eligible for tax credits covering 30% to 70% of total project costs. Projects that did not must be placed in service by December 31, 2027. Energy Secretary Chris Wright announced the expiration publicly, calling it the end of roughly 35 years of continuous federal support for wind and solar electricity generation.

The Solar Energy Industries Association estimated more than 200 gigawatts of solar capacity secured safe-harbor status before the deadline, enough to support development through 2030. The wind industry fell significantly short. Development projects reached only 23 gigawatts against an earlier projection of 46 gigawatts, less than half the expected pipeline. The divergence between solar and wind reflects structural differences in project timelines, supply chain exposure, and the cost of compliance with parallel FEOC rules — the foreign entity of concern restrictions that stripped credits from projects using equipment or financial relationships tied to China, Russia, Iran, or North Korea.

Approximately 85% of safe-harbored projects established eligibility before December 2025, according to Wood Mackenzie data. The rush to lock in status early was driven by Treasury’s January 2026 FEOC regulations, which applied to projects beginning construction after January 1, 2026. Developers who could move before that date avoided the added compliance layer entirely. Heliene, a North American solar panel manufacturer, reported 70% higher sales in Q1 2026 compared with the same period in 2025, directly attributable to domestic sourcing demand created by FEOC pressure. That supply chain shift — from Chinese equipment toward North American manufacturing — was the industrial policy the OBBB embedded inside the subsidy phaseout.

The legal landscape added a final complication in the week before the deadline. On June 6, 2026, the US District Court for the District of Columbia vacated IRS Notice 2025-42 in Oregon Environmental Council v. Internal Revenue Service, finding the agency had failed to justify its departure from long-standing guidance and had not adequately considered industry reliance on the 5% Safe Harbor provision. The court’s ruling briefly restored the 5% Safe Harbor for larger wind and solar projects, the method that had allowed developers to begin construction simply by incurring 5% of total project costs rather than undertaking physical work. The IRS is expected to appeal or issue revised guidance. The statutory July 4, 2026 deadline itself was not affected by the ruling — only the method of qualifying for it.

What the deadline did not touch is equally important for the forward investment picture. Energy storage, geothermal, hydropower, nuclear, and fuel cell technologies are not subject to the accelerated phaseout. These technologies retain credit eligibility through 2033 under current law. The OBBB also explicitly preserved transferability of credits and direct pay for nonprofits and government entities, keeping tax equity markets functional for projects that remain eligible. The policy shift did not eliminate the clean energy tax credit system. It restructured it — away from intermittent generation and toward firm, dispatchable capacity. The PJM crisis the same weekend made the argument for firm capacity in real time.

Small developers are the most exposed. Developers without resources to navigate shifting guidance, comply with FEOC rules, and document construction-start activities in real time are already being left behind. Segue Renewable Infrastructure’s David Riester said there are “definitely a lot of projects that could be placed in service before the end of 2030 but will not, because the effective requirement that they be safe-harbored is a barrier that they can’t get over.” PPA prices are rising as credits phase out. Utility Dive reported on July 2 that analysts expect continued PPA price increases through 2026 and into 2027.

PJM Broke Its 20-Year All-Time Demand Record the Same Week the Subsidies That Would Have Built Its New Supply Expired

PJM Interconnection forecast peak demand of 166,147 megawatts for July 2, 2026, which would have exceeded the grid’s all-time record of 165,563 megawatts set in August 2006 — a record that had stood for 20 years. Peak instantaneous load reached approximately 162.7 to 163 gigawatts on July 2, and Bloomberg reported that demand had “likely surpassed” the 2006 record once demand response resources are fully calculated over the standard 60-day period. Wednesday July 1 delivered a preliminary peak of 161,910 megawatts, among the highest readings PJM has recorded in its history.

Energy Secretary Chris Wright signed two Section 202(c) emergency orders under the Federal Power Act on June 30, effective through July 3. The first authorized PJM to direct any customer with at least 50 megawatts of peak load — primarily data centers — to switch to onsite backup generators within 15 minutes of an emergency signal, freeing capacity for homes and hospitals. The second granted power plants temporary relief from sulfur dioxide, nitrogen oxide, and other emission limits, allowing them to run at maximum output. It was the third federal emergency intervention in the PJM grid in 2026, following orders after a January cold snap and a May heat-and-maintenance squeeze. The DOE has issued 34 Section 202(c) orders across US grid operators in 2026 alone.

Wholesale electricity prices spiked above $2,000 per megawatt hour in PJM, with Western Hub day-ahead prices settling at $1,222.75 per megawatt hour on July 1. Operating reserves fell to 5,091 megawatts from 10,196 megawatts earlier in the week, leaving the grid little cushion against an unplanned outage. PJM’s 18 gigawatts of fast-start reserves held, and no rolling blackouts occurred. 160 million Americans across 30 states were under extreme heat alerts. Heat indices reached 113 degrees Fahrenheit in Washington, 112 degrees in Philadelphia, and 110 degrees in New York City. Philadelphia cancelled its July 4 parade. Boston delayed fireworks access by four hours.

The generation mix during the crisis made the policy context explicit. During the comparable late-June PJM peak, natural gas supplied 44% of generation, coal 19%, nuclear 20%, and solar 6%, according to US Energy Information Administration data. The grid that approached a 20-year demand record on the holiday weekend of July 4, 2026 — the same day federal wind and solar subsidies formally expired — was running on fossil fuels for nearly two-thirds of its output, with nuclear providing most of the remainder. Solar, the technology that had just seen 200 gigawatts of projects rush to beat a construction deadline, was contributing 6%.

The deeper driver of the crisis is structural, not seasonal. PJM projects peak demand growth of 32 gigawatts between 2024 and 2030. All but 2 gigawatts of that increase is attributed to data centers. The buildout has already driven PJM’s capacity market price to a record $333.44 per megawatt-day, up more than 11-fold from $28.92 just three auction cycles earlier. Monitoring Analytics, PJM’s independent market monitor, attributed 63% of that run-up to data center demand — a cost of roughly $9.3 billion now landing on ratepayers. “We need to treat grid flexibility as part of everyday operations, not just crisis response,” said Jigar Shah, former US Department of Energy official.

Energy Secretary Wright used the emergency to contrast the current administration’s energy policy record with what he called previous “energy subtraction policies” that had “weakened the grid.” The statement did not address the structural dynamic the grid data itself surfaces: the all-time peak PJM approached this week was set in August 2006, before data centers at their current scale existed and before electric vehicles were a meaningful part of the demand picture. The capacity shortfall is not an artifact of any single administration’s energy policy. It is the compound result of demand that has grown faster than the transmission and generation infrastructure built to serve it — and a capacity market whose price signal, at $333/MW-day, is only now reflecting what the grid actually needs.

PPA Prices Rising, New Jersey Data Center Tariff Bill, MISO Capacity Surplus, and the Nuclear and Storage Investment Case

PPA prices rising as clean energy credits phase out

Utility Dive reported on July 2 that analysts expect power purchase agreement prices to rise through 2026 and into 2027 as the loss of ITC and PTC support increases the unsubsidized cost of new solar and wind generation. The phaseout is already showing up in project economics. Developers who did not safe-harbor before July 4 face a structurally different capital environment for any project planning horizon beyond 2027.

New Jersey data center tariff bill

New Jersey lawmakers sent a bill to the governor that applies to new and existing data centers of at least 50 megawatts and aims to shield other ratepayers from costs associated with the AI-driven demand surge. The legislation is a direct response to the same dynamic Monitoring Analytics quantified in PJM’s capacity market: data center growth is driving grid costs that are currently socialized across all ratepayers.

MISO capacity surplus and the dispatchable generation advantage

The Midcontinent Independent System Operator projects growing capacity surpluses over the next five years, a contrast to PJM’s structural tightness. The divergence reflects different regional balances of data center growth, transmission investment, and generation mix. MISO’s relative cushion makes it the region where post-subsidy renewables development faces the least capacity market pressure.

Storage and nuclear as structural beneficiaries

The OBBB’s technology structure explicitly favors dispatchable, firm capacity. Energy storage, geothermal, hydropower, nuclear, and fuel cell technologies retain credit eligibility through 2033. The PJM crisis accelerates the investment case: a grid that runs 44% gas and 19% coal at peak demand, with a capacity market at $333/MW-day and 30 GW of data center demand still coming, needs firm capacity that the phased-out wind and solar credits were not designed to provide. Battery storage emerged as the fastest-growing segment in Q1 2026, and it is the one clean energy category the OBBB did not penalize.

Sources

Editorial Disclosure

This analysis is based entirely on publicly available information including federal legislation, regulatory guidance, court filings, grid operator reports, and named wire services and secondary reporting from named publications. No securities are the primary subject of this article. aktiego.com has not received any compensation from any company mentioned, their management, investor relations representatives, or any third party. No staff member or principal of aktiego.com holds a position in any security mentioned at the time of publication. The One Big Beautiful Bill Act (OBBB) is federal legislation signed July 4, 2025. Legislative details cited are sourced to named law firm client alerts and analysis from Sidley Austin, Steptoe, Latham & Watkins, RSM, and related publications. aktiego.com does not provide legal or tax advice; readers with project-specific questions should consult qualified legal counsel. Solar safe-harbor gigawatt figures attributed to the Solar Energy Industries Association as reported in named secondary sources. Wind pipeline figures attributed to named secondary reporting citing Wood Mackenzie and industry sources. These figures are not independently verified by aktiego.com. PJM demand figures are sourced to PJM Inside Lines (primary), Bloomberg, Reuters, Utility Dive, and Yes Energy. The official 2026 peak demand figure requires a 60-day demand response calculation period; the 2006 record comparison and record-breaking claim are attributed to Bloomberg’s July 3 2026 reporting with appropriate uncertainty noted. Wholesale electricity price figures sourced to Yes Energy and OilPrice.com citing Reuters and PJM data. These are spot market prices subject to settlement adjustments. Monitoring Analytics capacity cost figures and data center attribution percentages are sourced to named secondary reporting citing Monitoring Analytics’ independent market monitor reports. IRS Notice 2025-42 court ruling sourced to Plante Moran client alert and named secondary reporting. The IRS is expected to appeal or issue revised guidance; the legal landscape may change. aktiego.com does not provide legal advice. Coverage on aktiego.com is provided for informational and educational purposes only. aktiego.com is not a registered investment advisor. Nothing in this article constitutes financial, investment, legal, or professional advice. Readers are encouraged to conduct their own due diligence and consult qualified advisors before making any decisions. For more information please see our full DISCLAIMER

PJM Hit a 20-Year Demand Record as Wind and Solar Subsidies Expire

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