The New York ISO has clarified the timing around some of its price formation and capacity market design change projects that are needed as the power grid transitions to help meet the state's ambitious climate change adaptation strategy.
Building on the NYISO's "Grid in Transition" report released in December 2019, the grid operator is scheduling stakeholder meetings to discuss ways to deal with emerging reliability and economic challenges that face New York's power sector, according to a presentation posted to the NYISO's website Jan. 3.
The discussions will be held roughly once a month during the NYISO's Installed Capacity Working Group/Market Implementation Working Group meetings. The first discussion meeting is scheduled for Feb. 4, and they continue through June.
Signed into law over the summer by Gov. Andrew Cuomo, the New York State Climate Leadership & Community Protection Act, known as New York's "Green New Deal," mandates that renewable energy resources supply 70% of the state's power by 2030 and that all the state's power supply be emissions-free by 2040.
The law also calls for 9,000 MW of offshore wind power capacity by 2035 — compared with none currently — 6,000 MW of solar by 2025, 3,000 MW of energy storage capacity by 2030 and significant energy efficiency gains by 2025.
"Through active engagement with stakeholders and policymakers, the NYISO is developing design improvements to meet the future challenges expected to arise with high levels of intermittent renewable and distributed energy resources," according to the presentation.
The plan includes a set of market design improvements that work together "coherently and efficiently" to address New York's changing grid reliability needs, the NYISO said.
Specifically, the grid operator is focused on price formation improvements that include ancillary services shortage pricing, constraint-specific transmission shortage pricing, enhanced fast-start pricing and pricing carbon dioxide emissions into its power dispatch system.
In total, the NYISO has identified nine areas of market design opportunities pertaining to alignment of competitive markets with state clean energy goals, valuing resource and grid flexibility, and improving capacity market valuation.
These initiatives "require immediate attention," and the grid operator recommends implementation in the next five years, through 2024.
The project's objective is to gather a variety of stakeholder feedback on key market design issues that may be impacted by New York's clean energy mandates and objectives, according to the NYISO.
Using stakeholder feedback, the grid operator has proposed the following discussion topics:
* Energy market enhancements.
* Capacity market enhancements.
* Reliability and market considerations.
* Interregional coordination.
* Future of fossil generation.
* Implications of a carbon-neutral grid.
Higher renewable energy penetration will involve a comprehensive review of the NYISO's market power mitigation measures to avoid interference with competitive price signals.
The NYISO's Comprehensive Mitigation Review Project would modify its installed capacity market framework in a manner that preserves competitive power price signals and economically efficient market outcomes required to maintain system reliability while supporting legislative goals.
The grid operator aims to complete this project in 2020. One aspect involves working to better align commercial operational dates with a new resource's capability period.
The starting capability period is important because the timing of entry impacts a number of inputs, including the load forecast, units assumed to be in service, installed capacity reference points and other values, the NYISO's market monitoring unit, Potomac Economics, said in a draft presentation.
The period is also important because the assumed timing of resource entry affects the generation mix, natural gas futures prices and the load forecast, which are key drivers of the location-based marginal price forecast that is used to calculate net revenue, the market monitor said.
The NYISO's goal is to schedule stakeholder votes on potential market rule changes pertaining to this issue in February and March.
There is also a broader resource adequacy proceeding (19-E-0530) underway at the state Public Service Commission to evaluate the efficacy of the NYISO's capacity market in the face of New York's new legislative mandates. Reply comments in that proceeding are due Jan. 31.
Jared Anderson is a reporter for S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.