NYISO to address capacity accreditation, energy transition, shortage pricing in 2022

The New York Independent System Operator plans to discuss with its stakeholders on Jan. 20 the capacity market, new resource integration, and energy market design projects prioritized for 2022 on topics including improving capacity accreditation and valuation, energy transition, and constraint specific transmission shortage pricing.

The NYISO's power market design team will go over the 2022 project schedules and deliverables with stakeholders at a Jan. 20 Installed Capacity and Market Issues Working Group meeting, according to a presentation posted to the grid operator's website.

Capacity accreditation is the first project highlighted under capacity market improvements. Capacity accreditation that reflects resources' contribution to resource adequacy is crucial and the NYISO has entered phase 2 of this project with stakeholder discussions beginning to determine the procedures and details for establishing capacity accreditation factors along with any needed manual revisions, according to the presentation.

The grid operator is targeting the third quarter of 2022 for completing the market design portion of the project. Specifically, the NYISO, with assistance from GE Energy Consulting, will work on determining the methodology for establishing capacity accreditation factor resource classes and the methodology for annually calculating the factors.

Potential manual revisions will be considered regarding resource specific derating factor evaluations, peakload windows, participation model rules for resource types and the NYISO will evaluate potential planning study impacts.

A related capacity market project will study capacity values as the current NYISO Services Tariff requires a quadrennial review of the capacity values for energy duration limited resources and intermittent power resources to evaluate the reliability benefit that these resources provide to the system.

The NYISO aims to have the capacity value study defined by Q3 2022.

New resource integration projects

State and federal initiatives like renewable energy credit procurements provide incentives for developers to couple storage and intermittent renewable assets, with such programs aimed at improving intermittent resource availability while firming their output, according to the presentation.

In December 2021, the NYISO implemented a co-located storage resources market participation model that allows an intermittent power resource and an energy storage resource to participate in NYISO markets as two distinct resources with a shared injection limit, "which better aligns the NYISO's market rules with state and federal efforts to integrate more clean energy," the grid operator said.

The 2022 project deliverable is the completion of market design and functional requirements.

Additionally, with a rapid transition is underway in New York from a power grid where energy is largely produced by central‐station fossil fuel generation, toward a grid with increased intermittent renewable resources and distributed generation, the NYISO is conducting a major study about how these changes may impact reliability and its operations.

A grid characterized by high levels of intermittent renewable resources and distributed generation will require potential market enhancements that focus on maintaining all aspects of grid reliability while using competitive markets to maximize economic efficiency and minimize the cost of maintaining reliability while supporting the state's climate policy efforts, the NYISO said.

"The study will inform the NYISO's planning, forecasting, and operations, as well as the development of wholesale market mechanisms to enhance grid resilience," according to the presentation.

Leveraging earlier studies, the grid operator will seek to identify and quantify the potential level of system flexibility and/or grid attributes needed to reliably maintain system balance. The study has a target completion date of Q4 2022.

Energy market design

The NYISO's 2017, 2018, and 2019 state of the market reports included a recommendation from the market monitor to use constraint specific transmission demand curves to set transmission constraint shadow prices during transmission shortages, according to the presentation.

The grid operator has done some work in recent years that can be used toward this effort with a goal of identifying the project's functional requirements by Q3 2022.

"This project will develop the transmission constraint pricing logic to enable the NYISO's market software to re-dispatch suppliers efficiently in the short term to alleviate constraints, as well as incentivize long-term investment in locations where suppliers could provide the greatest benefits," according to the presentation.

The Q1 workplan includes January stakeholder discussion about situations with multiple active transmission constraints on a single facility, and in February and March the discussion will focus on ways to address such situations.