Market Intelligence
Summer 2026 U.S. Energy Market Review
October 1, 2026 7 Minute
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Executive Summary
Hot temperatures exposed PJM’s reliability gap this summer, while ERCOT and CAISO enjoyed ample supply availability. Large solar and battery storage fleets in both Texas and California have contributed to improved reliability and low power prices over the summer. CAISO and ERCOT had ample supply to meet their recent load records. PJM, by contrast, has added little solar and battery capacity to date, leaving it more exposed to summer demand pressures and scarcity pricing. PJM's Western Hub day-ahead index prices have averaged more than twice ERCOT North and CAISO NP15 so far in 2026.
Markets
Western Hub real-time prices have now exceeded $1,000/MWh during at least one five-minute interval on 32 days this year through late September, up from 17 in all of 2025 and just six in 2024. Relief for PJM’s structural supply shortfall is nowhere in sight, and the cost of hedging power is rising. Calendar 2028 (Cal-28) power contracts trade at more than $75/MWh, up from about $55/MWh in January, while thinly traded Calendar 2030 (Cal-30) strips are at $70/MWh, as flat gas curves set the shape of the curve in outer years. Buyers with a long-term view may consider 2030 hedges. These still trade below the $72.87/MWh average day-ahead price in 2026 so far, even though reliability pressures are expected to worsen through 2030.
Demand hit an all-time 91.3 GW on July 22 and stayed above 90 GW on eight consecutive days in August without requiring any emergency grid action. Gas and solar covered 80% of the July 22 peak, while batteries, wind, and gas met system needs on most other high-demand evenings after solar dropped. Summer 2027 and 2028 contracts for on-peak hours fell about $25/MWh in six weeks over the summer. Markets expect ample supply and a pause in ERCOT’s data center interconnection process to limit near-term price pressures. But that supply margin could narrow soon. ERCOT filings show that 44 GW of large loads already hold conditional grid capacity. A large share could arrive between 2028 and 2030, reshaping the Texas grid.
Batteries covered the early evening peak in CAISO and kept index prices low over the summer. Gas mostly sets the power price when demand stays high after batteries run down. Despite low index prices this year, Calendar 2027 (Cal-27) forwards at NP15 are trading $16/MWh (52%) higher than the average index price in 2026 year-to-date. SoCal and PG&E Citygate 2027 gas prices are trading 69% above 2026 cash averages, lifting power prices for next year. Cal-27 power contracts are spreading the higher gas costs across all 8,760 hours, even though gas now sets the price in fewer hours. Locking in full-year strips in California may be an expensive hedge as the grid relies less on gas generation.
Figure 1: Around-the-Clock Forward Contracts vs 2026 Day-Ahead Index Prices, as of October 5, 2026
PJM
Market Findings
PJM’s thin supply cushion is leading to more grid stress, even under mild weather conditions. In the Western Hub, real-time prices have exceeded $1,000/MWh on 32 days this year through September 29, nearly double the 17 recorded in all of 2025. Western Hub 2028 forwards are trending at more than $75/MWh, up from $55/MWh in January. Cal-30 strips have grown more slowly this year and trade above $70/MWh, below the $72.87/MWh average day-ahead price so far in 2026, although supply adequacy is expected to decline through 2030. The current term discount in the forward curve may give buyers a window to lock in long-dated strips at prices that underestimate longer-term reliability risks.
Summer Lookback
High temperatures pushed load in PJM to 162.7 GW on July 2, leading to two consecutive days of emergency alerts and demand response events. Western Hub real-time prices peaked at $2,459/MWh that day. The BGE and PEPCO utility zones climbed past $3,000/MWh as transmission constraints into the Mid-Atlantic load pocket added more than $1,000/MWh in congestion costs. Congestion is a growing constraint for buyers in Maryland and Washington, D.C., where price spikes are much more common than at the benchmark Western Hub.
Tight supply is also showing up after the summer peak is over. On September 16, load exceeded PJM’s forecasts while more than 20 GW of supply was out for planned fall maintenance. PJM issued multiple emergency alerts, and real-time prices reached $4,332/MWh at the Western Hub and climbed past $5,000/MWh in BGE, roughly $1,900/MWh above the July 2 Western Hub peak. On October 13, the grid operator declared another maximum generation alert.
Buyer Implications
Buyers are currently paying more to secure 2028 power than for 2030, even though the system’s reliability shortfall is likely to deepen through 2030 and gas prices are set to rise. Cal-30 at the Western Hub trades near $70/MWh, below both the $75/MWh buyers are paying for 2028 and the $72.87/MWh average day-ahead price so far in 2026. Thin trading and gas curves influence long-dated strips. Still, buyers should consider fixing a portion of their Cal-30 volumes while they trade at a discount. Behind-the-meter batteries and demand response can also cut fast-rising costs tied to peak load contribution.
Figure 2: Days with at Least One 5-Minute Real-Time Price Interval Above $1,000/MWh
ERCOT
Market Findings
ERCOT had enough supply to meet both this summer’s all-time 91.3 GW demand record and a winter freeze in January 2026. The Texas governor’s August 3 letter to pause data center connection studies reinforced market expectations that the grid will not face reliability pressures soon. Summer on-peak Cal-27 and Cal-28 prices at the North Hub fell about $25/MWh in just six weeks over the summer. But the recent sell-off looks justified only for the near term. ERCOT reports at least 44 GW of large loads holding conditional grid capacity, equal to nearly half this summer’s 91.3 GW record. Most of these loads are likely to move forward once the pause expires by year-end.
Summer Lookback
High temperatures pushed demand in ERCOT to a record of 91.3 GW on July 22. Load then also exceeded 90 GW on eight consecutive days in August. Each of those days beat the previous record of 85.7 GW set in 2024. Index prices averaged $23/MWh to $36/MWh across all hubs from June to August. Gas and solar accounted for 80% of the power mix during the July 22 peak. On most other evenings of high demand, enough batteries, wind, and gas were available to meet power needs after solar output dropped.
ERCOT forward curves fell in the weeks following the July 22 record and still trade well below the early-June levels, as markets likely concluded that supply adequacy concerns were overblown. Forward prices fell further after the Texas governor paused data center grid connection studies on August 3. Cal-28 contracts dropped the most, by about $15/MWh just days after the letter, as markets priced in delays for new demand that was expected to energize that year.
Buyer Implications
New data center audit requirements will likely only push back the timing of energization by four to six months, instead of lowering the number of new large loads already in advanced stages. Longer-dated ERCOT forward contracts priced after this summer’s sell-off may not reflect future demand pressures from 44 GW of around-the-clock demand that has already secured grid capacity and arrives between 2028 and 2030. The recent sell-off may open a window to buy 2028 to 2030 supply before new data center demand arrives and new supply lags. Battery additions are already set to fall by nearly 10% this year, according to Modo Energy, while gas turbine shortages are extending delivery timelines to more than five years.
Figure 3: ERCOT North On-Peak Forward Summer Prices by Calendar Year, June 1, 2026, to September 23, 2026
Source: OTCGH, CBRE analysis. Note: Shaded areas show repricing windows (July 20 to 28, August 3 to 7). Dashed lines: event dates.
CAISO
Market Findings
Solar and battery storage contained power prices in California this summer. Despite CAISO’s improved supply availability with the rise of four-hour storage, markets still expect power prices to rise next year. As of October 5, around-the-clock power for 2027 traded about $16/MWh above the year-to-date average index price, a 52% premium. Gas prices at SoCal and PG&E Citygate for 2027 point to gas costs climbing 69% above 2026 average cash prices. A full-year around-the-clock contract for 2027 charges that gas premium across every hour of the year, even as gas generation concentrates into fewer hours. Buyers are paying for increased gas costs when it may not set the price.
Summer Lookback
Solar and storage held average day-ahead prices at about $38/MWh at SP15 and below $50/MWh at NP15 over the summer. Solar output peaked at 23.8 GW and battery discharge hit a record 13.4 GW. The rise of battery storage in California has driven a decline in hourly gas generation this year, especially from 6 to 11 pm. Gas supplied 21.9% of hourly in-state output through September, down from 26% in the same period last year.
Early evening peak demand poses less of a reliability risk in California. On September 9, CAISO set a net load record of 45.9 GW at 7 pm. Prices held steady as batteries, gas, and imports met system demand. The role of gas remains relevant when late evening demand stays high during hot summer nights, once the grid’s battery storage depletes. Gas supplied more than 40% of all power from 10 pm to midnight across July and August, reaching 60% on some nights.
Buyer Implications
Expensive Cal-27 strips spread next year’s higher gas prices evenly across all 8,760 hours, as the real exposure is shifting to just the evening hours through midnight. Buyers can explore alternative solutions outside the forward markets. Behind-the-meter batteries and demand response can cut consumption during gas-heavy hours, often providing the most cost-effective way to directly reduce exposure to gas prices. Buyers that use most of their power in solar-heavy daytime hours, such as offices, cooling loads, and single-shift manufacturing, may need far less hedging.
Figure 4: Average Hourly Gas Share of CAISO’s In-State Generation, January to September 2025 vs 2026
Source: GridStatus, CAISO, CBRE analysis.
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