PJM Interconnection coordinates the continuous buying, selling and delivery of wholesale electricity through the Energy Market. In its role as market operator, PJM balances the needs of suppliers, wholesale customers and other market participants and monitors market activities to ensure open, fair and equitable access.
PJM’s Energy Market operates much like a stock exchange, with market participants establishing a price for electricity by matching supply and demand.
The market uses locational marginal pricing (LMP) that reflects the value of the energy at the specific location and time it is delivered. If the lowest-priced electricity can reach all locations, prices are the same across the entire grid. When there is transmission congestion, energy cannot flow freely to certain locations. In that case, more-expensive electricity is ordered to meet that demand. As a result, the locational marginal price is higher in those locations.
The Energy Market consists of Day-Ahead and Real-Time markets. The Day-Ahead Market is a forward market in which hourly LMPs are calculated for the next operating day based on generation offers, demand bids and scheduled bilateral transactions.
The Real-Time Market is a spot market in which current LMPs are calculated at five-minute intervals based on actual grid operating conditions. Real-time prices are available. PJM settles transactions hourly and issues invoices to market participants monthly.
PJM Operational Data is available.