Webinar Analysts: PJM Capacity Auction, European Energy Markets and Natural Gas Insights
During Constellation’s July Energy Market Intelligence Webinar, the Commodities Management Group (CMG) provided an overview of current and future factors shaping the energy landscape, including PJM capacity auction results, a hot start to the summer, LNG and natural gas fundamentals and an overview of the UK and European energy markets.
PJM Capacity Auction
On July 14, 2026, the PJM Interconnection announced the results of its 2028/2029 Base Residual auction which secured 138,318 MW of unforced capacity generation (UCAP) and demand response to meet projected electricity needs for more than 67 million people across 13 states and the District of Columbia. The panelists noted that the auction fell short of PJM’s desired 20% reserve margin, landing closer to 14.7% and leaving an estimated shortfall of roughly 6,800 MW.
From a pricing standpoint, the auction cleared at the $325/MW-day price cap, which was expected. However, PJM’s simulation showed that without the cap, much of the RTO would have cleared far higher at around $554/MW-day, with ComEd separating at about $776/MW-day. The discussion emphasized that while caps limit customer cost exposure, they may also reduce the incentive for new generation to come online.
About 525 MW of new generation or uprates cleared the auction, and while gas capacity appeared to increase, some of that reflected coal units converting to gas rather than entirely new gas generation. This reinforces PJM’s need for a system reliability backstop auction. Development is expected to begin around September and could potentially include longer 10- or 15-year commitments designed to encourage new generation development.
Weather Outlook
At mid-summer, the U.S. was tracking near the seventh-hottest summer on record, with above-normal temperatures in the East, West and Canada. However, rain in the Gulf Coast and South, a less extreme Texas summer and the potential cooling influence from El Niño were expected to prevent a record-setting summer. Drought remained a concern, especially in the West.
El Niño was described as moderate, with potential to strengthen by fall or winter, but not yet “super.” Europe was the bigger weather story, with Western Europe and the UK experiencing their hottest summer start since 1950 and potentially finishing among the hottest summers on record.
UK & European Energy Markets
Three members of Constellation Generation Limited, Constellation’s UK and European team, joined the webinar to provide an international market perspective. In Europe, renewables are scaling quickly and helping reduce natural gas consumption, but prices remain highly exposed to global gas, LNG and geopolitical risks. Businesses are often focused on wholesale commodity costs, but non-commodity costs such as network charges, environmental levies, taxes and other regulated charges have become a growing share of bills. Transmission charges increased sharply from April 1, distribution charges are expected to change next April and some costs may be avoidable only through exemptions or solutions such as behind-the-meter generation, private wires or self-generation.
Natural Gas & LNG Fundamentals
Natural gas production remains near record levels, storage is healthy and close to historical norms and the market was characterized as relatively stable and neutral-to-bearish heading into the back half of the cooling season. Production is back to its winter highs of ~110 Bcf/d. Rig counts and frac crews have ticked up as the Iran conflict continues to support demand for U.S. exports and associated gas production in the Permian basin. Several Texas pipeline projects will support production growth in early 2027.
While domestic natural gas fundamentals remain relatively stable, global LNG markets have become increasingly tight. Europe is competing with Asia for LNG supply, while LNG price indices — TTF, NBP and JKM — are all elevated. The panelists noted that reduced Qatari LNG availability, lower Freeport output and constrained flows through the Strait of Hormuz have contributed to tightening global LNG supply. Overall, LNG and gas markets overall were presented as exposed to geopolitics, weather-driven demand, storage shortfalls and global supply competition.
Market Trends and Temperature
The webinar concluded with a look at forward power charts, including conversations about “the right time to buy,” the “Market Temperature” and other factors affecting the energy market.
The webinar team will be taking their summer break in August and will host the next Energy Market Intel Webinar on Wednesday, September 16 at 2 pm ET. Constellation will offer detailed and timely updates on factors affecting the energy landscape such as weather, natural gas storage and production, and domestic and global economic conditions. Register by visiting www.constellation.com/marketintelwebinar.
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