Businesses that operate in the PJM Interconnection region could see energy costs climbing soon—and for some, it may be significant. 

PJM Interconnection, the organization responsible for managing electricity across 13 states in the Mid-Atlantic and Midwest regions and Washington D.C., has announced a major increase in capacity prices for the 2025-2026 delivery year and beyond.

Starting in June 2025, some commercial customers could see a rate hike of up to 29% on their capacity price, which determines the cost of electricity reliability.  

While businesses across various industries could see negative bottom-line impact with the upcoming PJM rate increase, it also presents an opportunity to rethink energy strategies. Instead of simply reacting to the rising costs and paying a higher energy bill, there are ways for business owners to take back control. 

What’s Causing the PJM Rate Increase? 

PJM is a grid operator that ensures the reliability of power. To maintain that reliability, grid operators plan years ahead to make sure there is enough electricity to supply future demand. One method of planning used is an annual capacity auction, which helps secure the commitments from energy resources like power plants to be available when needed, especially during peak demand periods or emergencies. 

Following the most recent capacity auction, PJM’s price for the 2025-2026 delivery year is expected to rise from $50 to $269.97 per megawatt-day. 

The drastic increase is driven by a few key factors: 

Issues with gas power plants operating in extreme weather 

An interconnection backlog 

Higher demand from growing industries 

Overall grid reliability issues 

As a result, PJM must pass those higher costs along to both residential and commercial energy users, leading to a steep increase in electricity rates. And with grid reliability still a concern, the trend of rising capacity costs could continue in future auctions. 

What Businesses Will Be Impacted by PJM Rate Increases?  

Any business in PJM’s territory that relies heavily on energy will feel the impact as operating costs rise, especially those with already tight budgets. However, there are some that may feel the impact more than others. 

Hospitals and Healthcare Systems 

Healthcare systems are always under pressure to keep costs down while providing the best patient care possible. Hospitals and healthcare facilities operate 24/7, meaning energy is a constant and a major operating expense. As these price increases roll out, healthcare systems will need to find ways to manage rising electricity costs while maintaining patient care standards. 

Rising energy bills could also limit funding for other areas, making energy efficiency a top priority to help keep costs in check. 

Industrial Companies 

For industrial companies that rely heavily on energy-intensive machinery, rising electricity costs are a major concern. Manufacturing processes often run around the clock, and the cost of energy can make or break profitability.  

Increased costs could affect the price of goods manufactured, and companies may need to explore ways to reduce energy consumption or alternative energy sources to keep production running smoothly and cost effectively.   

Auto Dealerships 

Showrooms, service centers, and parking lots at auto dealerships all require energy, and with prices increasing, so will overhead costs. That means higher bills for lighting, HVAC, and service operations. And for dealerships looking to expand their electric vehicle (EV) offerings, there’s an added complexity of powering charging infrastructure, potentially making energy bills even more unpredictable. 

Commercial Real Estate (CRE) Portfolios 

CRE owners, especially those with multi-tenant properties, will also face pressure as electricity prices rise. Increased operating costs could reduce net operating income (NOI), particularly for owners and operators of office buildings, retail spaces, and multifamily communities. Additionally, properties with high energy-consuming operations may face rising utility costs that could impact both the tenants and owner. 

Owners may need to pass increased energy costs to tenants or find a way to offset rising expenses through energy-efficient property upgrades.  

How Can Businesses Combat PJM’s Rising Costs? 

There are ways for businesses to avoid PJM’s rate hike, with one option being distributed generation (DG) solutions. A DG system typically includes a power generation source (i.e. solar) and energy storage (i.e. battery storage), which enables businesses to generate their own power on-site.  

DG systems help to stabilize energy costs and avoid volatile utility rates. Additional benefits include: 

Reduced energy costs due to less power being purchased from the grid 

Less reliance on the grid during peak demand hours when power is most expensive 

More control over your energy supply 

Ability to maintain operations during outages or peak demand periods 

New revenue streams by selling energy back to the grid 

Reduced carbon emissions to meet sustainability and ESG goals 

Your Partner for Every Step of the Distributed Generation Process 

SitelogIQ is your one-stop partner for all project phases of distributed generation solutions. In addition to being your consultant and contractor, we’re also a strategic partner that manages all phases of a project from planning and utility coordination, to installation and incentive management. Our team also helps you identify funding strategies and navigates incentive applications and management on your behalf—we ensure you never leave money on the table.  

As operating expenses continue to rise for businesses, we’re here to help make yours more energy efficient and help you combat increasing costs. Let’s chat about your specific needs today. 

When electrifying their fleet, many operators run cost calculations for EV trucks and vans, only to be left with sticker shock on charging infrastructure. 

But there are plenty of funding options that are available for fleet operators to offset the costs of both electrified vehicles and the corresponding charging infrastructure. One example includes low carbon fuel standard (LCFS) credits. 

LCFS credits help offset upfront infrastructure costs, while promoting clean transportation.  

What Are Low Carbon Fuel Credits? 

Low carbon fuel credits are part of state-run programs designed to reduce the carbon intensity (CI) of transportation fuels. These programs encourage the use of cleaner alternatives like biofuels, hydrogen, and electricity by assigning a carbon score to different fuel types. 

LCFS programs require companies that produce high-carbon fuels (think: large oil companies) to offset their emissions by purchasing low-carbon credits. These credits are generated by entities using clean technologies like EVs or renewable fuels. The credits are then bought and sold on a private market, with transactions occurring directly between the credit generators (i.e. EV fleet operators) and the buyers (i.e. oil companies). 

Electricity has one of the lowest CIs, making EV charging infrastructure an advantageous option for generating credits. The revenue collected from the credits can be used at the company’s discretion, but many fleet operators reinvest it into the purchase of more electrified vehicles or to offset the costs of charging infrastructure. 

Which States Have Low Carbon Fuel Credits? 

Three states currently have fully implemented LCFS programs: 

California 

Oregon 

Washington 

Other states, including Minnesota, Michigan, and New York, are exploring similar programs but are not yet operational. 

Within each state, the cost of the LCFS credit will fluctuate, sometimes as frequently as daily. You can view historic and future credit price predictions from our partners at FuSE here.  

How LCFS Credit Programs Offer Fleet Operators a New Revenue Stream  

Fleet operators often face higher upfront costs when electrifying their fleet compared to Internal Combustion Engines (ICE) vehicles. ICE refers to a collection of vehicles that are powered by internal combustion engines, meaning they run on gasoline or diesel fuel. The EVs themselves are typically more expensive to purchase, and the additional need for charging infrastructure adds another layer of expense. 

However, LCFS credits offer a compelling way to justify these investments. By generating credits through charging infrastructure, fleet operators can unlock a recurring revenue stream that helps to offset these initial or ongoing costs —revenue that simply isn’t possible with all-ICE fleets. 

The process is as follows: 

Earn credits for charging the electrified fleet. 

Sell credits to high-carbon generators. 

Reinvest revenue generated from credits in upfront or ongoing infrastructure costs. 

While this process can seem straightforward, keep in mind that  buying and selling the credits on a private market isn’t quite as simple. High-carbon generators are required by the state to purchase credits, and they typically prefer to buy credits in bulk to meet compliance without ongoing management. The buying and selling process is often cumbersome and can result in a major administrative burden. Having a partner that facilitates these transactions helps to simplify the process and ensures you’re unlocking the full revenue potential of credits.  

Offsetting EV Infrastructure Costs with LCFS Credit Program: Real-World Example 

What Other Funding Options Exist to Offset EV Infrastructure Costs? 

In addition to LCFS credits, or if you operate a fleet in a state that does not have a LCFS program, there are other funding options that exist to offset upfront infrastructure costs. Federal tax incentives, state-level rebates and grants, and local utility programs offer reduced installation costs or charging rate subsidiaries. There are also plenty of financing options like leasing or loans, or lesser-known strategies including Charging-as-a-Service (CaaS). 

Check out this clip from our webinar about funding a fleet electrification strategy: 

Interested in listening to the full webinar? Click here to get access to an on-demand recording of the presentation. 

Your One-Stop Partner for the Full Electrification Process 

At SitelogIQ, we help you forecast and monetize LCFS credits with our vetted intermediary partners that support on both the buying and selling side.  

We’re also your one-stop partner for all phases of electrification infrastructure projects, including funding strategy and incentive management. Our team works hands-on with you from design through installation to warranty management and results tracking. We tailor a solution based on your current layout, charging capacity, number of charging ports needed, utility requirements, state and local mandates, accessibility requirements, financial needs, and more—both for right now and for future planning. 

Let us help you navigate the low carbon fuel credits and other funding options. Let’s chat about your fleet electrification needs. 

You’ve probably seen the news by now that the Federal Reserve slashed interest rates by a half-point—the first rate cut since the start of the COVID-19 pandemic and more than the quarter-point reduction that most analysts were predicting.   

Commercial Real Estate (CRE) owners and operators felt the burden of high interest rates these last few years more than some other industries. High interest rates raise the bar for business owners, setting hard-to-achieve return targets for each investment.  

Auto was another hard-hit industry. High interest rates can decrease vehicle demand by making financing more expensive and sales cycles longer. This necessitated dealership owners to adapt their strategies to maintain profitability.  

What Does the Fed’s Interest Rate Cut Mean for Businesses? 

The interest rate cut has a huge impact on consumers, from mortgages to auto loans to credit cards. It also signals something much larger: This move has been widely interpreted as an indication that the economy is getting the “soft landing” that regulators were targeting.  This means executives can feel comfortable shifting their focus from protecting against worst case risks to investing in their businesses. 

For CRE owners, lower rates create a more favorable environment for buying, selling, and, most importantly, investing in property upgrades.  

Experts also predict good news for auto dealerships. Car loans are highly responsive to Federal interest rates. This, coupled with the availability of vehicles right now, means prices likely won’t go up—resulting in more customers for dealerships. More customers willing to spend could also result in positive momentum for EV adoption. 

This shift in economic outlook not only encourages executives to invest in their businesses, but also creates a more conducive landscape for location improvements that can attract tenants and customers. 

If you’ve paused or slowed down property improvement projects, now is the time to revisit them. Here’s why. 

Why Is Now a Good Time to Revisit Paused Projects?

Over the last few years, cost-conscious business owners became wary of launching new projects or raising capital. This may have led to slow playing or completely pausing any sort of location upgrade project. 

But as interest rates drop, so does the pressure. The need for massive returns diminishes, and projects that once seemed too risky or expensive can now offer a more reasonable path to profitability. When borrowing costs are lower, business owners are less concerned about raising the necessary capital for improvements, and this opens the door for action.  

If you’ve been waiting for the right moment to restart sustainability initiatives, modernization projects, or tenant- or customer-attraction upgrades, that moment is now. 

What Does the Rate Cut Mean for My Competitive Strategy? 

Market conditions are signaling that right now is a good time to revisit key investments you may have sidelined.  

Keep in mind this is not only about resuming projects. It’s also about preparing for changing customer and tenant demands, and ensuring your business or real estate property is well positioned to compete. As interest rates drop, other business owners will also be revisiting their plans, and the competition for tenants, visitors, and/or customers at your properties will continue to grow.  

When thinking about projects to reopen, consider asking these questions: 

Is now the time to centralize operations to improve project efficiencies? 

Do we have projects that are nearly complete that we can quickly get over the finish line? 

Are we positioned to attract higher-value tenants or customers? 

Can we meet current tenant or customer-demands (example: EV charging)? 

Can we target industries that are thriving in the current economic climate? 

If we wait, could competitor properties outpace us in amenities, sustainability, or tenant / customer experience? 

Is our portfolio positioned to meet future energy efficiency benchmarking requirements or mandates?  

Can we repurpose underutilized space to meet ESG goals?  

What role can project upgrades play in tenant retention? 

While lower interest rates offer an immediate financial advantage, they also provide an opportunity to think long-term. 

Bottom Line: Act Now While Interest Rates Are Lower 

The Federal Reserve’s rate cut offers a unique chance for business owners to jumpstart paused projects and make their locations more competitive. Whether you’ve been holding off on sustainability initiatives, centralizing operations, or simply making your locations more attractive to tenants, customers, or visitors, the market is telling you to move forward. Waiting too long could mean missing out on a rare window of opportunity where borrowing is cheaper, competition is less fierce, and the economic outlook is strong.   

SitelogIQ can help. We’re your partner for accelerated, centralized, and turnkey energy efficiency projects across your entire nationwide portfolio. We help CRE owners, auto dealers, and more rapidly deploy energy efficiency and sustainability solutions. 

Let’s chat about the projects you put on pause. We can help you rapidly prioritize and implement solutions while interest rates are favorable.