Long-duration storage emerges triumphant under PJM’s new scheme 

Great news, long-duration storage: PJM is finally ready to see and recognize your value.  

The nation’s largest grid operator recently released its updated Effective Load Carrying Capability (ELCC) values for the 2027/28 auction. ELCC, which measures the amount of reliability an asset can contribute to the grid, prioritizes when that resource can deliver power over how much energy it can provide. PJM is, for the first time, assigning sharply different capacity values based on a storage asset’s duration.  

Four-hour batteries will be valued at 58% ELCC in 2027/28, with eight-hour systems hitting 70% and ten-hour assets topping out 78%. PJM has explicitly elevated longer-duration configurations to the top tier of emerging reliability assets. 

“PJM is providing a premium for resources that can reduce or shift load to non-peak hours or deliver energy in the specific hours when the system is actually at-risk,” explained Deeksha Anand, the eastern markets lead at market research firm Modo Energy. She told ESS News that the move marks a clear, performance-based signal: when a resource shows up, particularly during winter reliability hours, now matters more.  

According to PJM’s latest reliability modeling, loss-of-load events and reliability risks are increasingly occurring in the winter due to extreme cold. Extreme weather events like Winter Storm Elliott in 2022 have exposed the limitations of gas peaker plants, Anand explained, which are more vulnerable to frequent outages and fuel supply constraints in the cold.  

That’s why demand response (DR) and longer-duration storage have become more valuable and are valued as such for the 2027/28 auction, Anand said: both can perform when thermal availability tightens and renewable output is uncertain or low. Plus, the economics for DR providers have gotten sweeter.  

By increasing DR’s ELCC to 92% from 69%, PJM raised the accredited capacity revenue by about a third for the same megawatt of DR enrolled (based on last auction’s clearing price of $329/MW-day). But there’s no longer a performance window: DR is now modeled as a 24/7 resource that must be able to contribute energy throughout winter temperature lows and hot summer afternoons alike. Still, DR participation has stabilized at 8 GW during the last two auctions; in Anand’s eyes, the “uplift could encourage the market to maybe nudge back toward the 11-13 GW levels seen a decade ago.” 

Here’s how the revenues would actually break out. A four-hour battery clearing at recent base residual auction (BRA) prices would earn around $70,000 per year in capacity revenue, Anand said, compared to approximately $84,000 for an eight-hour configuration and more than $94,000 for ten hours.  

“Moving from a 4-hour to a 10-hour configuration increases accredited capacity revenues by roughly 33–35% for the same nameplate MW,” she explained, which is a large enough shift that it could significantly reshape merchant storage bid strategies heading into the next auction. She cautioned, however, that developers need to weigh those increased revenues against long-duration storage’s higher capex and consider what arbitrage opportunities might be available.   

Based on Modo Energy’s analysis of 2025 revenues for currently operating batteries in PJM, clearing in the BRA boosts annual revenues for a 4-hour BESS by around 20-23% compared to a year without a capacity award. Yet in the 2026/27 auction, Anand said, only four batteries cleared, all of which were 4-hour duration batteries that together totaled 35 MW.  

“It’s a very small slice of the total cleared capacity stack,” she added. And, while long-duration storage’s numbers are better, many long-duration non-lithium-ion technologies are earlier in their commercial adoption cycles. “It only pencils out if the added cost is justified by the uplift in arbitrage value. In PJM, however, the arbitrage value tends to diminish with every additional hour of duration beyond 4 hours.” 

Though “there are at least 1 GW of 10-hour duration projects queued with signed interconnection agreements” that are slated to begin commercial operations in late 2027 and early 2028, Anand pointed out that “if history is any indication, CODs in PJM often slip” due to supply chain and construction bottlenecks. It’s thus unlikely most of these projects will arrive in time for the 2027/28 auction.   

What that means in practice is a near-term mismatch where the 2027-28 auction will value long-duration storage more than ever, but most of the buildable pipeline remains four-hour lithium-ion, particularly as the pivot to longer durations “only pencils out if the added cost is justified by the uplift in accredited capacity revenues or arbitrage value.”