ISO-NE capacity auction prices climb from record lows to clear at $2.48 to $3.98/kW-m

New York — ISO New England's Forward Capacity Auction 15 concluded with preliminary clearing prices ranging from $2.48 per kilowatt-month to $3.98 kW-month for the 2024/25 capacity commitment period, up from a record-low clearing price of $2.00/kW-month in FCA 14, the grid operator said Feb. 11.

"The clearing prices in FCA 15 reveal the different values across the region based on the individual capacity needs for each zone," Robert Ethier, vice president for system planning at ISO-NE, said in an emailed statement.

Additionally, new this year is a large amount of energy storage -- almost 600 MW -- that has cleared the market, Ethier said.

FCA 15 cleared three separate prices because of New England's local capacity requirements, with capacity zones developed to align with power system transmission constraints, according to the statement.

Capacity zones signal areas of the system where there could be a potential capacity shortfall or surplus, and multiple zones help ensure that capacity is located and priced appropriately, the ISO said.

The preliminary clearing prices for FCA 15 were $3.98 kW-month in the Southeast New England zone, $2.61 kW-month in the Rest-of-Pool zone, and $2.48 kW-month in the Northern New England and Maine zones.

ISO-NE capacity prices declined every year since FCA 9 when they neared $10/kW-m and bottomed at $2.00/kW-m in FCA 14, before increasing by as much as 99% in FCA 15.

The net installed capacity requirement, which serves as the key parameter driving changes to the demand curve used in the auction, increased 780 MW from FCA 14, driven primarily by a forecast load increase, according to S&P Global Platts Analytics.

That factor, along with generation unit retirements, helped result in the higher capacity clearing prices.

Detailed results

The total capacity cleared in the auction was 34,621 MW to meet the 33,270 MW net installed capacity target for 2024-2025.

The total consisted of the following components:

• 29,243 MW of generation, including 950 MW of new resources;
• 3,891 MW (including 170 MW new) of demand resources, including energy efficiency, load management, and distributed generation resources;
• More than 630 MW of new plus existing battery storage; and
• 1,487 MW of total imports from New York, Québec, Canada, and New Brunswick, Canada

More than 2,525 MW of new resources secured obligations during the auction. Of that total, 19 MW received their obligations under the renewable technology resource designation, which remained from prior auctions, the ISO said.

The RTR designation permitted a limited volume of renewable energy resources to participate in the auction without being subject to the minimum offer-price rule, or MOPR, with FCA 15 marking the final year of the RTR exemption, according to ISO-NE. The MOPR was designed to strip out the impact of state subsidies from bidding behavior.

Nearly 600 MW have entered the market under the RTR designation since FCA 9, the first auction that applied the RTR designation, the statement said.

Before the auction, 199 MW of resources submitted retirement bids, while an additional 43 MW of resources

submitted permanent de-list bids to leave the capacity market. ISO-NE said that 101 MW of these de-list bids were cleared before the auction and 141 MW were cleared during the auction.

"Hundreds of generation facilities were selected in this year's auction, representing a diverse set of technologies to meet capacity requirements in the years 2024 and 2025," Dan Dolan, president of trade group New England Power Generators Association, said in a statement.

Dolan also said that the electricity market must evolve, noting "state decarbonization policies are not today adequately accounted for, and it is past time that a solution be put in place."

"Whether through meaningfully pricing carbon dioxide emissions, or other proposals, market solutions exist," Dolan said.

NEPGA is optimistic that 2021 offers an opportunity to move forward, as this is a "unique moment in which efforts led by the states, the grid operator -- ISO New England -- and stakeholders across the electricity industry are working to evolve the electricity market to meet the decarbonization challenge," he said.

The auction concluded on Feb. 8 after five rounds of bidding.