In this list
Electric Power

US Northeast power markets try to balance changes to capacity markets, valuation mechanisms

Energy | Electric Power

Platts Forward Curves – Gas and Power

Energy | Electric Power | Oil | Refined Products | Metals | Non-Ferrous | Steel | Shipping | Containers

Market Movers Americas, Oct. 2-6: Regulatory talks ongoing for power, metals markets

Oil | Energy Transition | Energy

APPEC 2024

Energy | Oil

Interactive: Global oil flow tracker

Electric Power | Electricity | Energy | Energy Transition | Renewables

Platts EuGO: European Guarantees of Origin assessments

Agriculture | Grains | Energy | Energy Transition | LNG | Natural Gas | Natural Gas (North American) | Oil | Crude Oil | Refined Products | Metals | Petrochemicals | Shipping

Commodities Calendar: 2023 Q4

For full access to real-time updates, breaking news, analysis, pricing and data visualization subscribe today.

Subscribe Now

US Northeast power markets try to balance changes to capacity markets, valuation mechanisms


ISOs trying to adjust to more subsidized resources

Energy markets should more efficiently compensate generators

  • Author
  • Jared Anderson
  • Editor
  • Rocco Canonica
  • Commodity
  • Electric Power

New York — Northeastern US power markets are at an inflection point, industry experts said Thursday, as independent system operators attempt to adjust capacity markets to reflect changing resource mixes and at the same time improve energy market valuation mechanisms.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"Despite plenty of cheap wholesale power, state-level renewable energy mandates and programs continue, which says states want a different set of resources than those being procured in the capacity markets," Bill Berg, vice president of wholesale market development for Exelon, said during the S&P Global Platts Northeast Power and Gas Markets Conference in New York.

Berg said it's clear that the industry is changing fast and market rules need to catch up.

Resource mixes are changing across the Northeast with increasing volumes of renewable energy and gas-fired power generation being added to the regional power grids, while coal and nuclear capacity generally decline. Much of the renewable energy development is being driven by state-level renewable procurement systems and greenhouse gas emissions reduction mandates.

The market in New England will dramatically change in the next five to 10 years with the prospect of up to 60% of the regional electricity coming from subsidized resources, said Dan Dolan, president of trade group New England Power Generators Association.

Today 15% to 18% of the resources in the market receive support, Dolan said, adding the existing market structure is not sufficient to handle a bifurcated market with nearly half subsidized and half unsubsidized resources.

The panelists generally agreed that in addition to capacity market design changes, energy markets also need to be adjusted to more efficiently provide revenue to resources that provide more value in evolving power generation resource mixes.

"Big corporations want clean energy so we are headed there, but we have to organize the revenue structure so competition still exists because if we get too much subsidized generation the market seizes," said Brett Kruse, vice president of market design at merchant generator Calpine.


New York is concerned the Federal Energy Regulatory Commission will make them change their capacity market because some resources get subsidies and some don't and they do not want to do that so they are working on integrating a carbon price into wholesale power prices instead, Kruse said.

The market benefit of putting a price on carbon dioxide emissions is one area the panelists agreed upon.

Approximately 16 GW of nuclear power generation capacity could retire over next five years and about 5 GW could be at high risk of retirement in that time frame, Manan Ahuja, senior director of North America Electric Power at S&P Global Platts Analytics, said earlier in the day.

It's important to preserve existing clean energy resources such as nuclear power, which supplies 20% of US power generation capacity and 60% of the clean energy in the US, said Shahid Malik, president of PSEG Energy Resources and Trade. Renewable energy provides less than 10% of US power production, Malik said.

Nuclear plants struggle in markets that only recognize short-term costs and procure the cheapest resource which is currently gas, Malik said.

There needs to be an increased focus on the energy and ancillary services markets, Exelon's Berg said. The energy markets are more dynamic and don't suffer the challenges ISOs wrestle with in procuring resources years ahead, he said.

NEPGA's Dolan said there are solutions on the energy market side that more accurately value reserves. There is a need to better compensate "resources needed in the moment" and ISO New England is working on a seasonal forward product, the "details of which are murky." Dolan said we don't yet know whether those measures will be sufficient.

"Capacity markets should be adjunct to energy markets, not the other way around," Malik said.

-- Jared Anderson,

-- Edited by Rocco Canonica,