Delaware Commercial Electricity: PJM Capacity Realities and Delmarva Power
Delaware operates as a deregulated PJM state with competitive retail supply. In 2026, commercial facilities face massive PJM capacity cost increases—up 800%+ from prior auctions—flowing directly through Delmarva Power delivery tariffs. Competitive supply shopping can reduce the energy component, but capacity and transmission charges are unavoidable pass-throughs.
Executive Impact
- →The Capacity Cost Explosion: In deregulated markets, your bill is split into Generation (the actual electrons) and Capacity (paying generators to remain on standby). In the DPL zone, due to high retirement rates of regional fossil plants without adequate replacements, capacity costs now frequently outweigh the actual commodity cost of electricity for mid-sized manufacturers.
- →Delmarva Power (Exelon) Delivery Hikes: Regardless of which third-party supplier you select, Delmarva Power still charges distribution "wires" fees. The Delaware Public Service Commission recently authorized multi-million dollar revenue increases for DPL to harden coastal grid infrastructure against extreme weather, embedding baseline inflation into delivery tariffs.
- →RPS and Offshore Wind Mandates: Delaware's aggressive Renewable Portfolio Standard (RPS) requires 40% renewable energy by 2035. As the state heavily subsidizes expensive offshore wind projects (via Renewable Energy Credits, or RECs), these state-mandated compliance costs are layered directly into every commercial retail electricity contract.
Redefining Procurement Strategy in the DPL Zone
Because the wholesale commodity cost of energy (LMP) is no longer the primary driver of Delaware electricity inflation, buyers must shift focus toward managing PJM grid-reliability mechanisms.
- Capacity Tag (PLC) Management Strategy: A facility's annual capacity obligation (Peak Load Contribution, or PLC) is determined by its usage during the 5 single hottest hours across the entire PJM grid during the previous summer. Proactive commercial users deploy sophisticated 5CP (Coincident Peak) alerting software. By dramatically shutting down non-essential equipment during these 5 targeted hours, a facility can permanently slash its capacity charges for the entire following planning year.
- Pass-Through Contract Structures: Locking in a traditional "Fully Fixed" retail contract in Delaware currently forces you to pay massive risk premiums, as suppliers price in the absolute worst-case scenario for capacity and REC volatility. Sophisticated buyers are shifting to "Block-and-Index" or "Energy Fixed, Capacity Pass-Through" structures, taking on the risk of PJM capacity swings directly in exchange for stripping out the supplier's 15-20% margin.
- Behind-the-Meter Solar Hedges: Given the extraordinary cost of importing grid power onto the Delmarva peninsula, behind-the-meter commercial solar arrays have achieved rapid payback periods (under 5 years) for large footprint facilities like warehouses and distribution centers. On-site generation physically bypasses both PJM capacity charges and Delmarva Power delivery tariffs.
The Impact of Maryland's Data Center Boom
Delaware's rate reality is not purely internal; it is deeply interconnected with neighboring states. The explosive, multi-gigawatt buildout of AI data centers just across the border in Maryland (and further out in Northern Virginia) is sapping systemic baseload generation from the broader regional grid. As available power gets sucked westward, the physical physics of the PJM grid means the DPL zone will continue to suffer from constrained import capabilities, guaranteeing elevated locational pricing baselines through at least 2029.