SYSO’s 2025 Mid-Year Market Recap

The first half of 2025 has ushered in a wave of structural changes across U.S. wholesale electricity markets, with energy storage positioned at the center. From mandatory capacity market participation in PJM to interconnection fast-tracking in MISO and stricter performance rules from NERC, storage developers now face a dramatically more complex, and opportunity-rich, landscape. Policy shifts, auction results, and regulatory reform are redefining how solar and battery projects qualify, operate, and monetize across the ISO/RTO spectrum. In parallel, new state programs like New Jersey’s Garden State Energy Storage Program (GSESP) are opening fresh incentive pathways for transmission-scale BESS. This article recaps the most consequential changes so far in 2025, offering a strategic market snapshot for developers and asset owners preparing for what’s next. Whether you’re navigating market qualification or planning long-term operations, understanding these changes is critical to your project’s success.

In a landmark policy shift, PJM has eliminated the ability for storage and renewable assets to opt out of the capacity market, making participation mandatory for eligible resources. This move reflects PJM’s growing reliance on variable generation and its need to ensure system adequacy. As part of this change, PJM has introduced updated MSOC rules, modified Performance Assessment Intervals (PAI), and penalty caps. Despite these updates, new assets participating in the capacity markets are wrought with challenges. Projects that fail to prepare may find themselves disqualified or under-credited. For storage developers in particular, proactive engagement with PJM’s market rules is now mission-critical.

In an effort to combat price volatility, PJM’s recent cap and collar reforms introduce new guardrails in the capacity market, placing ceilings and floors on clearing prices. While designed to enhance market predictability and protect consumers from extreme auction outcomes, these mechanisms may also compress upside revenue potential for developers in tight supply years. For new storage and renewable projects that depend heavily on capacity payments to pencil, this shift introduces added uncertainty. Developers must now account for a narrower revenue range when modeling future earnings, especially in high-demand zones. As PJM seeks to balance reliability with affordability, project economics will increasingly depend on stacked revenues and smart market participation.

MISO’s Summer Planning Resource Auction cleared at $666.50/MW/day, the highest price in the region’s history. These elevated clearing prices signal a changing market dynamic, where dispatchable resources like battery storage are gaining value as flexible capacity providers. As the system evolves, storage assets are no longer just optional grid tools. They are increasingly central to meeting seasonal peaks and reliability needs. To accelerate deployment, MISO also introduced interconnection reforms for standalone storage projects. This change could help alleviate queue bottlenecks and position BESS to capitalize on emerging value streams. For developers, these changes mark a significant opportunity, but one that requires fast-moving market engagement and operational readiness.

NERC’s new Inverter-Based Resource (IBR) reforms represent a major shift in how grid operators, developers, and asset owners must approach renewable and battery integration. As IBRs rapidly grow across U.S. power markets, NERC has introduced sweeping reforms to ensure grid reliability. These changes include new registration categories (GO-IBR and GOP-IBR) that expand compliance obligations to previously exempt assets. Registration may now be triggered by planning coordinators, transmission operators, or even asset owners themselves, significantly widening the pool of affected projects. Once registered, owners must meet complex requirements involving protection systems, telemetry, disturbance monitoring, and audit preparedness. Many developers may be caught off guard by these retroactive obligations and risk falling out of compliance. 

New Jersey has opened its Phase 1 Tranche 1 solicitation under the Garden State Energy Storage Program (GSESP), offering developers a 15-year fixed $/MW-year incentive for transmission-connected BESS projects. Eligible projects must hold an executed ISA with PJM, target COD by Q4 2027, and maintain at least 90% availability each year. Longer-duration storage is favored through ELCC-based rankings, and bids between $40,000 – $90,000/MW-year may prove viable based on modeling performed by the BPU. Developers must also show readiness to earn wholesale market revenue, including through active participation with a registered PJM Market Participant.

The first half of 2025 was defined by regulatory change, incentive design, and market recalibration, but the second half will be all about execution. Developers who can align quickly with new rules, anticipate evolving market dynamics, and operate with discipline will be best positioned to capture value. Whether you’re navigating PJM’s capacity mandates, bidding into GSESP, or preparing for NERC compliance, the window to act is now. SYSO provides the strategy, modeling, and operations expertise to help you execute with confidence in every market. Ready to move from reaction to leadership? Let’s talk today.