PJM interconnection fixes and Hormuz flows set the Energy premarket tape

Key Developments

PJM surplus-interconnection fixes target capacity without waiting for new queues

Utility Dive reported Friday that PJM is considering rule changes to make surplus interconnection service more usable after its early-2025 SIS reform produced limited results (Utility Dive). SIS lets a new generator or storage project connect at an existing power facility’s interconnection point by using excess capacity interconnection rights, and Utility Dive cited Gavin Ahern saying those reviews can be faster than standard interconnection studies and can avoid costly network upgrades (Utility Dive). The scale gap is material: PJM has received 14 SIS applications since 2023 — eight still under review and two approved — while MISO was studying 14.8 GW of SIS requests as of June 30 and SPP was studying 14.3 GW (Utility Dive). PacifiCorp was reviewing 33 projects totaling 5.2 GW as of Aug. 13, and MISO and SPP have already brought 44 and 22 surplus-interconnection projects online, respectively (Utility Dive).

The operational read-through is that PJM is looking for capacity options that do not require a full new-build interconnection cycle. The issue is especially relevant because PJM’s last two capacity auctions missed reserve-margin targets, with the shortfall widening to about 6.8 GW for the 2028/29 delivery year from 6.5 GW for 2027/28 (Utility Dive). If PJM can let hybrid resources use separate market-participation models for energy and ancillary services while participating in capacity as one resource, existing solar, wind, and thermal sites could become a faster staging ground for batteries and incremental capacity. That would not solve siting or revenue questions, but it changes the bottleneck from finding new interconnection rights to making existing rights commercially workable.

What to watch: Track PJM’s Market Implementation Committee process and whether any rule filing lets hybrid facilities preserve existing offtake arrangements while adding storage; the practical test is whether SIS approvals move beyond two projects and whether the 6.8-GW capacity shortfall begins to narrow (Utility Dive).

Hormuz shipments recover, but the flow data remain contested

CNBC reported Friday that U.S. Central Command told the outlet it has helped tankers move more than 660 million barrels of crude through the Strait of Hormuz since early May and assisted about 1,300 commercial vessels over the same period (CNBC). Based on CENTCOM’s July 29 statement that U.S. forces had assisted 500 million barrels since May, CNBC calculated that at least 160 million barrels, or more than 7 million barrels per day, transited the strait over the past three weeks (CNBC). That remains below pre-war exports of about 20 million b/d of crude oil and products through Hormuz, while other estimates diverge: U.S. officials told Axios about 10 million b/d had exited in recent weeks, Energy Secretary Chris Wright cited nearly 9 million b/d on an Aug. 11 seven-day average, and Windward estimated crude exports at about 5 million b/d in July after 4 million b/d in June and 1.6 million b/d in May (CNBC).

Figure 1 — Recent estimates of oil flow through the Strait of Hormuz diverge sharply: U.S. officials cited ~10M b/d (Axios), Energy Secretary Chris Wright ~9M b/d (Aug. 11 seven-day average), CENTCOM’s 660M-barrel tally implies >7M b/d over three weeks, and maritime tracker Windward estimated ~5M b/d of crude in July — all well below the ~20M b/d of crude and products that moved through Hormuz before the war. Source: (CNBC).

The price channel is still active. CNBC separately reported Friday that oil was headed for a second straight weekly gain after U.S. officials said Washington would impose the “toughest sanctions in history” against Iran, even as Treasury Secretary Scott Bessent said large-scale military attacks were “likely” not returning (CNBC). CNBC’s live page said Brent was on course for a monthly gain of nearly 6% after last week’s 5.95% rise, and that Brent closed above $93/bbl on Thursday for the first time since July 24 (CNBC). The read-through is that the market is not only measuring barrels; it is measuring confidence in route security, sanctions enforcement, and the reliability of competing flow estimates.

What to watch: Watch whether independent ship-tracking estimates converge toward U.S. government figures, whether attacks around Hormuz decline from the 17 commercial ships cited for July and August, and whether sanctions guidance targets shipping, insurance, or payment channels rather than only headline crude exports (CNBC).

Western drought turns hydropower from a renewable asset into a reliability variable

Canary Media reported Friday that Lake Mead and Lake Powell, the two largest U.S. reservoirs, reached record-low water levels this month and can produce more than 3 GW of power when full (Canary Media). The current water levels in both reservoirs are too low to produce anywhere near that amount, and the Bureau of Reclamation projects a slim but real chance they could fall too low to produce any power at some point next year (Canary Media). Canary Media also noted that drought is affecting hydropower beyond the Southwest, including Quebec, where hydro provides nearly all power and years of drought have diminished generation capacity (Canary Media). Two large transmission lines brought Canadian hydropower into New England and New York City this year, but Canary Media reported those lines have transported far less power than expected because of outages and drought conditions (Canary Media).

The analytical hinge is that hydropower is increasingly behaving like weather-sensitive capacity rather than a fixed clean-energy backstop. That matters for planners because drought can stress two different systems at once: the West loses dispatchable hydro during heat-driven demand periods, while the Northeast loses imported hydro volumes it expected to use as a clean-firm substitute. In that setting, the capacity value of storage, transmission diversity, thermal reserves, and demand response rises when reservoir levels fall, even if the nameplate hydro fleet has not changed.

What to watch: Track Bureau of Reclamation projections for Mead and Powell, actual deliveries on the New England and New York hydropower lines, and whether summer reliability assessments begin treating drought-adjusted hydro as a binding capacity assumption rather than a background renewable resource (Canary Media).

Japan’s energy inflation shows the imported-fuel channel moving through CPI

CNBC reported Friday that Japan’s July headline inflation reached 1.9%, its highest level this year, while core inflation, which excludes fresh food but includes energy, matched expectations at 1.8% (CNBC). Energy prices rose for the first time since November 2025 despite government subsidies, and CNBC tied the increase to high oil costs from the Middle East conflict (CNBC). The same report said July wholesale inflation reached 7.2%, with electricity charges the largest contributor, while fresh-food prices rose 7% after a 3.9% increase in June (CNBC). CNBC also reported that Japan’s core-core inflation rate, excluding both fresh food and energy, was 1.9% (CNBC).

The second-order read-through is that fuel-import exposure can push through to macro data even where governments are actively cushioning consumers. Subsidies may damp the consumer-price hit, but the wholesale data indicate that electricity charges are carrying the upstream fuel shock into the cost base. For energy markets, Japan is a reminder that Hormuz and crude-price disruption do not stop at physical shipping volumes: they migrate into power prices, currency-sensitive import bills, fiscal subsidies, and central-bank inflation narratives.

What to watch: Monitor whether Japan extends or changes energy subsidies, whether wholesale electricity pressure persists into August data, and whether the Bank of Japan repeats its warning that core inflation could move clearly above 2% from the second half of fiscal 2026 if crude prices and yen depreciation remain pressure points (CNBC).

This is an AI Briefing — AI-generated analysis published under TLCapital.AI. It is not personal research or positions, and it is not investment advice. Figures are sourced to primary filings with dates noted throughout. Do your own diligence.