PJM and the capacity crunch

Summary

Catalyst with Shayle Kann: Episode Summary – "PJM and the Capacity Crunch"

Release Date: July 31, 2025
Host: Shayle Kann, Energy Impact Partners
Guest: Steve Piper, Research Director for North American Power and Renewables at S&P Global

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1. Introduction

In this episode of Catalyst, Shayle Kann delves deep into the pressing issues surrounding the electricity market, focusing on the PJM Capacity Auction and its broader implications. The conversation with Steve Piper sheds light on the complexities of capacity markets, the surge in capacity prices, and the ensuing effects on consumers and the energy sector.

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2. Understanding the PJM Capacity Auction

Shayle Khan introduces the topic by emphasizing the significance of the PJM Capacity Auction, referring to it as the "Woodstock for Electricity Nerds."

Key Points:

• Capacity Market Purpose: Designed to signal the need for reliable electricity capacity, encouraging investment in new power generation.
• PJM's Role: As the grid operator for the Mid-Atlantic region, PJM oversees one of the most critical capacity markets in the U.S., encompassing areas like Northern Virginia, a major data center hub.

Notable Quote:

Steve Piper [04:22]: "The concept of electric restructuring was to bring private investors into the energy markets, introducing new generation technologies and applications previously managed by regulated utilities."

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3. Mechanics of the Capacity Auction

Steve Piper explains the foundational structure of the capacity auctions, highlighting PJM's historical approach and recent shifts.

Key Points:

• Four-Year Forward Auction: Traditionally, PJM conducted auctions four years in advance, allowing developers ample time to bring new capacity online.
• Bidding Process: Generators bid a price for their capacity, which PJM stack ranks from lowest to highest to determine the clearing price based on demand curves.
• Recent Shift: Due to regulatory and market pressures, PJM has compressed the auction timeline to procure capacity for the upcoming year instead of four years ahead.

Notable Quote:

Steve Piper [06:47]: "PJM was essentially saying, what are we bid to build new capacity four years from now?"

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4. Surge in Capacity Prices

The discussion transitions to the dramatic increase in capacity prices over the past few years, spotlighting the factors contributing to this surge.

Key Points:

• Historical Prices: Early 2010s saw prices around $100 per megawatt-day.
• Recent Trends: Last year's clearing price was approximately $270 per megawatt-day, with the latest auction exceeding this figure.
• Price Caps: To mitigate consumer impact, PJM set a price cap at $329 per megawatt-day, which the latest auction reached.

Notable Quotes:

Shayl Khan [15:35]: "The pricing in the early 2000s was maybe around $100 per megawatt day... last year's clearing price was closer to $270 per megawatt day."

Steve Piper [16:27]: "PJM reached a settlement with the state of Pennsylvania to put a new price cap in place at about $329 per megawatt day."

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5. Implications for Resource Adequacy

Shayle and Steve explore the concept of resource adequacy, questioning whether the current signals indicate a looming capacity crunch.

Key Points:

• Red Flag Indicators: The significant increase in capacity prices serves as an economic signal that existing and new generation may not keep pace with rapidly growing demand.
• Economic Impact: Higher capacity prices translate directly to increased costs for consumers, manifesting as higher utility bills.
• Auction Timeline Compression: The shift from a four-year to a one-year procurement timeline exacerbates the challenge of scaling new capacity swiftly.

Notable Quote:

Steve Piper [20:53]: "You would have to call it a red flag... this is an economic event."

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6. Impact on Retail Prices

The surge in capacity prices doesn't remain confined to wholesale markets; it flows downstream, affecting retail electricity rates.

Key Points:

• Consumer Bills: Customers in regions like Ohio, Pennsylvania, and Maryland are experiencing significant monthly bill increases due to elevated capacity prices.
• Utility Pass-Through: Utilities are mandated to transfer the costs of capacity procurements directly to consumers, leading to higher retail rates.

Notable Quote:

Steve Piper [31:25]: "It flows right into the retail rates. The utilities that serve the customers have to pay those bills and they have to pass those bills through."

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7. Demand Response Participation

The role of demand response and other flexible resources in capacity markets is scrutinized, especially given their potential to swiftly adapt to capacity needs.

Key Points:

• Current Contributions: Despite high capacity prices, recent auctions have seen a decrease in demand response participation.
• Qualification Challenges: PJM's conservative assessments of demand response's reliability value (counting 60-70% of bid capacity) deter widespread participation.
• Industry Adaptation: Uncertainties around regulation and the evolving landscape of distributed resources hinder the growth of demand response initiatives.

Notable Quote:

Steve Piper [24:45]: "There's probably a period of adaptation before you see a lot of growth in demand response."

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8. National Perspective and Other ISOs

The issues observed in PJM are not isolated; similar trends are emerging across various Independent System Operators (ISOs) nationwide.

Key Points:

• Widespread Revisions: ISOs like New York, New England, and California are reassessing the reliability contributions of wind, solar, and storage, typically assigning lower values to these resources.
• Increased Reserve Margins: Most ISOs are elevating their target reserve margins, compelling a greater procurement of capacity.
• Conventional Generation Scrutiny: Traditional power sources, including gas and coal, are facing heightened evaluation post-events like winter storms.

Notable Quote:

Steve Piper [27:57]: "Every ISO has basically done two things that are noteworthy. One is they've revised the reliability contributions, particularly of wind, solar, and storage... and they've also said pretty uniformly we want a higher target reserve margin."

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9. Conclusion

The episode underscores a pivotal moment in the U.S. electricity market, where capacity auctions and their resultant pricing are signaling potential strains in resource adequacy. The compression of auction timelines, coupled with increased capacity prices, not only raises concerns about meeting future demand but also has tangible repercussions for consumers through elevated retail electricity costs. While demand response and renewable resources offer avenues for flexibility, regulatory uncertainties and conservative reliability assessments are limiting their effective deployment. As these dynamics unfold across various ISOs, the electricity market faces the dual challenge of ensuring reliability while managing economic impacts on both the supply side and consumers.

Final Notable Quote:

Shayl Khan [31:33]: "That's us up, which means retail prices can also only go. At least this component of retail prices can only go in one direction, which is up."

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For more insights and detailed discussions on climate technology and energy markets, visit Latitude Media.

Transcript

[Latitude Media]

Latitude Media covering the new frontiers of the energy transition.

[Shayl Khan]

I'm Shayl Khan and this is Catalyst.

[Steve Piper]

So the pricing in the early 2010s was maybe around $100amegawatt day. Last year's clearing price was closer to $270amegawatt day. And of course this auction we cleared even higher.

[Shayl Khan]

Coming up, we're talking about the Woodstock for Electricity Nerds, the PJM Capacity Auction.

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[Energy Hub]

Devices like EVs, home batteries and smart thermostats work together to support a more efficient, reliable and affordable power grid. Energy Hub is making this vision a reality today. With Energy Hub's Edge Derms platform, utilities can create virtual power plants through customer centric flexibility programs, making it easy to manage distributed resources and balance the grid. Unlock grid flexibility and reliability through cross der management with Energy hub, the trusted edgederms leader. Visit energyhub.com to learn more. Catalyst is brought to you by Antenna Group, the communications and marketing partner for mission driven organizations developing and adopting climate solutions. Their team of experts help businesses like yours identify, refine and amplify your authentic climate story. With over three decades of experience as a growth partner to the most consequential brands in the industry, their team is ready to make an impact on day one. Get started [e-mail].

[Shayl Khan]

I'm Shel Khan. I invest in early stage companies at Energy Impact Partners. Welcome. All right, so the more time that passes, the more that I want to spend time on this podcast talking about what's happening in the electric electricity market. The alarm bells on price and resource adequacy are ringing louder and louder and the downstream effects on consumers and enterprises in terms of rates are starting to show. And I think we're just at the beginning. There are so many things happening here right now. Just to list a few data centers obviously, but electrification in general, gas turbine shortages and long lead times clogged, interconnection queues pending expiration of tax credits, executive orders. Complicating those things even further, there are loan guarantees getting canceled for transmission lines, et cetera, et cetera. Anyway, the ultimate question here is what is the combined effect of all of these things? And that's nuanced and to some degree localized. But let's talk about one of the bigger alarm bells, which comes recently in the form of the annual Capacity Market Auction in pjm, which is the grid operator for the Mid Atlantic in the United States, which among other things is home to Northern Virginia, the data center hub of America. The PJM Capacity Market auction, nerdy as it is, gets a lot of attention in power market circles and I think not enough elsewhere. So let's unpack the results and the implications for this one. I had a really good conversation with Steve Piper. Steve is the research director for North American Power and Renewables at S and P Global. Also, for the last time, I am hosting an Ask Me Anything episode, another Ask Me Anything episode where I answer whatever questions you send. So send good ones. This is the last call, so get your questions in now. We have a lot of really good ones already, but I promise the best ones will float to the top and there is still time. So if you want to ask a question, email @cat catalyst latitude media.com that's catalyst latitudemedia.com here's Steve. Steve, welcome.

[Steve Piper]

Thanks.

[Shayl Khan]

Sh all right, let's start by you explaining what the PJM capacity Auction is.

[Steve Piper]

The old history maybe stretching back 15 years or so. The concept of electric restructuring in general was that prices that could be discovered in the marketplace would be good signals for investors and in particular bring private investors into the energy markets, bringing new forms of generation technology, new applications of energy to markets where previously they were all managed by regulated utilities. Right. That was the idea of restructuring. And so in a lot of markets this got expressed in kind of two sets of prices. One are the energy market prices or the LMPs, the electricity prices that each ISO would manage and produce. And then they replace the old sort of wholesale power trading structure with sets of prices that are discoverable every five minutes, clearing those energy prices or electricity prices. But then the second price signal that was created was for to signal the need for reliable capacity. And that was meant to be a more durable long term signal of the need to construct new power plants into the future.

[Shayl Khan]

Right. And we should say that some version of the capacity market exists basically everywhere other than Texas. Right. In the U.S. right.

[Steve Piper]

I mean, Texas tries to get that reliability payment into each hour. It's a unique approach in the markets. The other markets, most notably pjm, but many markets in the east eastern United States and throughout the country kind of use this sort of separate energy and capacity price construct where that price for capacity functions as a signal to investors to build new generation in the future or to uncover new sources of reliability value. If you're a fan of demand response and kind of other ways to bring reliability to these markets.

[Shayl Khan]

Right, okay, so then, so PJM is one of these markets that the wholesale market in the mid Atlantic. It's a big one as far as these also markets go. And they hold this capacity auction annually. Can you just kind of walk through the mechanics of like what is the capacity auction and what is it, what's it asking for?

[Steve Piper]

So the capacity market is asking developers of generation holders of power plants, you know, that are running today, as well as those who may develop new power plants in the future, you know, to basically bid a price for their capacity going forward in the future. PJM historically had run this as what they would call kind of a four years forward auction where the price signal would be for four years into the future. And this was thought to be a reliable signal in the sense of basically kind of saying, okay, if there's a good price that clears from the auction, I've got a little bit of time as a developer to bring my generation online and in service. Not every market does it that way. PJM was somewhat unique, PJM in New England, but this was viewed as giving developers the lead time to bring new capacity to, to bear. So with that background then PJM was basically saying what are we bid to build new capacity four years from now? If you're looking at a new gas fired generation plant, you might, you know, with, with your knowledge as a developer, understand what it would cost to procure the turbines, procure the engineering, get all the arrangements in place, the supply chains, fuel to bring that plant in service into the future. You might know what lending terms you can get and your amortization, all of those details that basically say, okay, how much revenue do I need from this capacity market to get financing? What are my prospects for selling the power into the grid so that I can get return for all who might invest in my power plant?

[Shayl Khan]

And that applies by the way, both to existing generation units that might retire, where you can bid into the capacity market to say what do I have to get paid to keep operating? And for developers who are building new capacity. Right. And that stuff gets mixed in together in the results.

[Steve Piper]

Absolutely. It's an important point, right? A strong enough price signal might signal, hey, there's going to be enough revenue in the future that as an existing asset, maybe a Coal plant, maybe an older gas plant. I can invest in it, keep it online and be a source of reliable capacity into the future. So what does PJM do? Try to kind of move the process forward one step. Basically they're going to take all of those bids, the sum total of Those bids, maybe 150 gigawatts of capacity in total, and go through a process of basically stack ranking those bids from lowest to highest. Look at how those highest bids compare to what they call a variable resource requirement curve. That is the demand curve that delivers different levels of procured capacity, which is kind of correlated with reliability with a price. And so you can think of it as a kind of a classic economics 101 solution. Where does that stack rank, supply cross that demand curve? And that is the price that they report out that will procure that level of capacity. At least that's what they hope.

[Shayl Khan]

And you mentioned the four years hence thing. Is that still true today? Like what? Because I think they shortened it. Right.

[Steve Piper]

It's a really important point. As PJM looked to revise the rules as they face some, some challenges from stakehold before the FERC to other regulatory bodies as they kind of made revisions to the reliability contributions of different assets. They had to pause the auctions for a number of years. And despite efforts to catch up and get back to that four year forward schedule, they essentially fell so far behind that now they are in a situation where they are procuring capacity just for the next reliability year, which is actually.

[Shayl Khan]

A key point getting to what we're going to talk about, which is the results of the auction in the past couple of years, which, which have been, I think, viewed as kind of a canary in the coal mine for the broader wholesale power market and capacity requirements in general. Because you've got, first of all, it's worth noting, right, PJM is, is home to Northern Virginia, the epicenter of data center development activity. So load growth is clear and dramatic, not just in Northern Virginia, but particularly there. And so we're watching what's happening as the market reacts to all this load growth and then all the other dynamics that are at play in the electricity market, retiring, existing generation, et cetera. So let's get briefly right to the heart of it. Why are we talking about the PJM capacity market here? What is it that happened in the past two years that makes it worthy of note?

[Steve Piper]

It's a confluence of events, just as you've described. We had a long period where the capacity prices were stable and pretty low reserve margins were perceived to be high in pjm. And so when they're high, you don't need a lot of new capacity. And at least in principle, that low price should be a signal that, okay, you don't need to bring a lot of new capacity to market. PJM became concerned, other stakeholders became concerned that those capacity prices maybe were too low and were disincentivizing investment and maybe incentivizing developers to pull capacity off the market to retire generation more quickly than is really appropriate. From a reliability standpoint, this happens at the same time, as you mentioned, demand, especially for data centers, but other types of load within PJM as well. Think about electrification, think about electric vehicles. But data centers are certainly the lead story at the same time as pjm. Sort of like, well, we're a little concerned about the investment side of the equation. Wow. Demand is also expanding very rapidly. And so you put those two pieces together together, and it creates a situation where PJM felt a very strong sense of urgency to start to get the price signals right and to make them more robust. And it wasn't just Northern Virginia, as you mentioned, that's sort of the data center center of the world. As Virginia's gotten built out and congested and actually is getting more data center build than it can handle, developers are radiating out from that trunk into Western Pennsylvania, into North Carolina, anywhere they can still be proximate to the trunk, but not be so congested to build. So it's the epicenter, if you will, of demand growth in pjm. You're seeing very rapid growth there. PJM wanted to get those price signals right. They made some changes to their auction rules to more appropriately reflect the reliability contribution of different resource segments. Gas, solar storage, the conventional segments, but also the new segments. And so, in effect, you know, your 100 megawatts didn't get you 100 megawatts of reliable capability in PJM anymore. It got you less than that as PJM viewed your contribution more conservatively. And so it took more bids, if you go back to that supply curve, more stacked bids to get you up to that demand curve and at a higher price. And then the previous auction was kind of the first shoe to drop in a clearing price that was many multiples of what it had been the previous five or even 10 years.

[Shayl Khan]

Yeah. Can you run through the numbers? Where had the pricing been? And then where has it been now the past two years?

[Steve Piper]

So the pricing in the early 2000 and tens was maybe around $100amegawatt day. Additional sort of reforms and changes that PJM made depressed the price even more at those high reserve margins, I think we got down as low as $30amegawatt day, barely enough to, to really deliver returns to merchant generation. In PJM, last year's clearing price was closer to $270amegawatt day. So you know, eight times more than it had been the last few auctions and you know, much higher than it even had been historically. And of course this auction, which we'll get to in a minute, we've cleared even higher.

[Latitude Media]

Yeah.

[Shayl Khan]

So the other point is, right, the these are capped prices in the auctions, so it's not like the price could go to infinity. And, and if I recall in the 2024 auction it hit the cap. So could have gone even higher in theory had it not been for the fact that there was a price cap.

[Steve Piper]

Absolutely. And there were concerns that prices could go even higher. A lot of stakeholders got involved, states who were kind of concerned about the consumer impacts of high capacity prices because these flow through the bill. Consumers see the results and they're starting to flow through. Even this year it's become a very salient issue. PJM reached a settlement with the state of Pennsylvania to put a new price cap in place at about $329 per megawatt day, higher than last year, but still, you know, not as high as potentially it could have gone. And we saw that price then actually hit that cap and clear at record notwithstanding that it could have gone even higher.

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[Shayl Khan]

So I think there's sort of two dimensions to why this matters for me, at least one is the signal that it sends about a capacity crunch. Are we going to have enough? How hard is it going to be for us to get enough capacity in time? And that's the big question underlying all this demand growth across the country. How hard is it going to be to actually get this stuff built? And particularly the fact that this is an auction reflecting next year. So all the problems that our listeners are well aware of with things like interconnection timelines make it really difficult to start a de novo project today that's going to come online. Not really difficult, literally impossible to bring a project online next year. And so one element to this that I want to talk about is what it portends about our resource adequacy, essentially. And then the second element you alluded to, which is the other concern with all the rising demand, everything else that's happening in the market is what it's going to end up meaning for retail prices. And obviously this is wholesale, but it flows through to retail as well. So I kind of want to cover each of those individually on the first one for you, I guess, in the context of pjm. And then maybe you can broaden this out to what we're seeing in other capacity markets. Is this a red flag or at least a yellow flag with regard to resource adequacy, or do you think it's sort of overblown as a concern?

[Steve Piper]

It's a really interesting question. I think you would have to call it a red flag. You know, from the perspective of the need for new generation and the potential cost of the generation, I always take a step back. You know, when we talk about resource adequacy, you know, it often gets portrayed in the media as risk of blackouts and grid failures and things like that. Right. And we just want to be really careful, careful. You know, this is an economic event. That said, it's A significant economic event, Right. Customers in Ohio and Pennsylvania and Maryland, they're getting these notices. Their bills are going up by 20 or 30 bucks a month, you know, starting this year as a result of last year's capacity auction price. This capacity auction that, that was announced last week was a good 20% higher in round numbers. And so that doesn't pretend the bill's going anywhere, but even higher. And so where the price was a signal to developers, now it's become a very salient signal for consumers and it's getting the kind of attention now that it's flowing through to bills. I did want to kind of come back to the point you made and sort of where we started, right. You know, PJM's auctions originally were for a four year advance period. Now they've become compressed down to a, you know, season ahead, one year ahead in effect. And it doesn't really allow much time for the market to adjust to these rapidly changing signals. Right. So on. You know, to take one example, gas generation prices like this are a strong signal for new gas generation. And turbines are being ordered, you know, ge, Siemens, you know, ramping up their factories, you know, but you know, they're one of my back up for a second. You know, the, the run on gas turbines is such that you can't, you can't deploy very many of them next year or even two years from now if you want to build the complex combined cycle generation systems. They're talking about 20, 30, 2032 long timelines that, you know, that the auction were originally structured for. But now those price signals come too quickly to merit a quick response. Or we can deploy some of the emerging technologies. Solar, wind, battery storage, these are fantastic technologies. They have a lot of deployment momentum. You can bring them in in a year or two, but they don't provide the same resource adequacy value as conventional dispatchable generation does. Maybe they'll get there, they're always improving and costs are falling. But they're also sort of caught up in this rush to meet the very near term needs of demand growth and the strong capacity pricing that this demand growth signals.

[Shayl Khan]

What about the other resource that can be deployed quickly, even more quickly than solar Wind storage. And I know does qualify or at least can qualify for s capacity in PJM as demand response, load side resources. How has that looked in these auctions the past couple of years? How much is it scaling? What are we seeing there?

[Steve Piper]

It's an important contribution. I think that there have been some auctions where we've seen more Demand response than you would expect given kind of where prices settled along with all the other resources that PJM has considered and kind of said, okay, if you bring 100 megawatts of gas generation, we count that as about 70 megawatts of reserve contribution. If you bring 100 megawatts solar, we may count that as 8 to 10 megawatts of reserve contribution. You know, very, very conservative. Maybe appropriate, given the needs of resource adequacy. Demand response is assessed a little bit similar to gas. Maybe between 60 and 70% of the megawatts they say they'll bring. PJM, you know, assesses you'll bring. If you bring 100 megawatts demand response, PJM says, great, we'll count that as about 60. Under those rules, demand response kind of needs to evolve so that it can contribute more. It brought about a gig gigawatt to the 2024 auction, and I think a lot of stakeholders felt with a stronger price signal in place, we'd see even more demand response. We actually saw a little bit less in this auction, and I think it points to the need for the industry to kind of evolve and adapt to the rules that PJM has kind of created for their participation.

[Shayl Khan]

Yeah, that's kind of what I was getting to. I was surprised at how little demand response we saw in the 2025 auction. The price seems more than sufficient to incentivize at least a good amount of demand response. And like I said, you can deploy it pretty quickly. So what is it that you think the industry is not doing today? Or is it that you're saying that the capacity accreditation is insufficient? Like, what is it that's holding it back?

[Steve Piper]

I think there's more risk that goes along with the capacity accreditation. A lot of uncertainty around the rules, and a need to kind of start factoring in some of these new segments that are coming in. Can a data center provide load flexibility in the context of demand aggregation? What happens if distributed storage really takes off? Does that compete with demand response, or can they sort of bring it in? I think along with a lot of other classical sources of generation, frankly, there's a lot of uncertainty and rules that are sort of evolving a little bit on the fly. And I think there's probably a period of adaptation before you see a lot of growth in demand response.

[Shayl Khan]

Okay, so let's broaden it out from PJM for a second. To what extent is this phenomenon that we are seeing in PJM specific to PJM versus happening all across the country? Is this a regional dynamic or a national One or somewhere in between.

[Steve Piper]

I think it is sufficiently widespread that you call it a national dynamic. All of the grid managers, independent system operators. PJM has the biggest footprint, as we described earlier. But New York, ISO, New England, ISO, California, Texas, all the major isos, Midwest, Midwest, ISO have all, all, you know, done sort of a rigorous reevaluation of the reliability contributions of wind and solar. For instance, they've taken their best guess at battery storage. And battery storage is more complicated. It's a relatively new segment. They're trying to understand that the technology is changing pretty rapidly. You've got different durations of battery storage to consider. So I'm less confident that they've necessarily gotten it right. And that's part of the issue, is that all of their assessments of reliability contributions to these different resources are kind of moving targets, given the importance of the capacity revenue stream. From the developer perspective, it creates a little more uncertainty than maybe you would like to see. But PJM has one of the older, I should say more longer duration capacity auction markets that goes back further. So in some ways it sits, it's sort of on the vanguard of making these changes. But every ISO has basically done two things that are noteworthy. One is they've revised the reliability contributions, particularly of wind, solar and storage. And those revisions have almost uniformly been lower. A megawatt equals significantly less than a megawatt in terms of reserve contribution. And they've also said, said pretty uniformly we want a higher target reserve margin. You know, PJM increased its target reserve margin in this past auction compared to the 2024 auction. California's updated its target, New York has updated its target ISO. New England is going through a similar process where that's likely to be the outcome. ERCOT's made a lot of changes. They're less impactful because it's committed to its power ahead struct. But, but you're seeing across the board this kind of derating of what these resources bring. And it's not just limited to the new green segments. Conventional generation comes under a lot of scrutiny too. After, after winter storm, uri Texas took a close look at that generation of gas generation. After winter storm, Elliot, PJM took a close look at gas generation, made a lot of these revisions. So, so if you think about reducing those assessments of reliability contribution but increasing your planning reserve targets, you're saying, well, we want more, but what generators bring is less. Then it's a very strong signal to bring new generation to market and in larger quantities than previous. And so the prices to incentivize that can really only go in one direction.

[Shayl Khan]

And that's us up, which means retail prices can also only go. At least this component of retail prices can only go in one direction, which is up.

[Steve Piper]

It flows. It flows right into the retail rates. The utilities that serve the customers have to pay those bills and they have to pass those bills through. Yeah.

[Shayl Khan]

All right, Steve, thank you for illuminating me on the latest PJM capacity auction. Thank you so much for the time, Shale.

[Steve Piper]

Thank you.

[Shayl Khan]

Steve Piper is the research director for North American Power and Renewables at S and P Global. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf. Mixing and theme song by Sean Marquand. Stephen Lacy is our executive editor. I'm Shayl Khan and this is Catalyst.