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ISO-NE analysis shows potential operable reserve shortfalls in the 2020s


Capacity margin of minus 2,500 MW in 90/10 scenario

Operating Procedure 4 actions trigger Pay-for-Performance

New York — An ISO-New England power generation capacity analysis shows there could be a negative margin in projected operable capacity in the 2020s, under certain assumptions, that would require operators to take capacity deficiency actions under Operating Procedure 4.

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"OP#4 events are of particular importance to generators because in addition to being associated with high energy prices they trigger Pay-for-Performance events, where generators are penalized or rewarded for under- or over-performance, respectively," Kieran Kemmerer, power market analyst with S&P Global Platts Analytics, said Wednesday.

The grid operator conducts multiple resource adequacy related studies that will form the basis of its 2019 Regional System Plan, according to a presentation given during an ISO-NE Planning Advisory Committee meeting Tuesday.

A "system-wide operable capacity analysis" is used to estimate the net generation capacity that will be available under specific scenarios, according to ISO-NE. The analysis identifies operable capacity margins, or the amount of resources that must be operational to meet peak demand plus operating-reserve requirements, under assumed 50/50 and 90/10 peak-load conditions, the presentation explained.

A 50/50 peak-load condition means there is a 50% chance that actual system peak load will exceed the forecasted value in any given year and a 90/10 forecast has a 10% probability of being exceeded by the actual peak. The 90/10 forecast is used to estimate peak demand under extreme peak weather conditions.


Under 90/10 peak load conditions, "New England could be short of operable capacity during the entire study period, if there is no surplus installed capacity above the net Installed Capacity Requirement and 'representative' net ICR," according to analysis based on ISO-NE's 2019 Capacity, Energy, Loads and Transmission report.

Operable capacity margin in the 90/10 scenario ranges:

  • -1,150 MW to -2,500 MW during the summer
  • -1,370 MW to -2,500 MW during the winter

Under 50/50 peak load conditions, the region could be short of operable capacity margins "during the winter peak demand periods for the entire study period and during the summer peak demand periods starting with the 2024-2025 capacity commitment period," ISO-NE said.

Operable capacity margins under 50/50 conditions ranges:

  • -310 MW to -470 MW during the summer
  • -160 MW to -1,200 MW during the winter

The net ICR is established annually to define the amount of capacity to procure in the next Forward Capacity Market auction.

The operable capacity analysis is "based on a variety of assumptions about future peak demand and future outage rates," Marcia Blomberg, an ISO-NE spokeswoman, said in an email Tuesday.

A negative margin in the projected operable capacity analysis is an indication that if all those assumptions materialized, system operators would need to implement "actions of Operating Procedure 4, Action During a Capacity Deficiency," Blomberg said. "So there are steps operators can take to address any operating capacity shortfalls," she added.

The last significant OP#4 occurred in September 2018 and persisted for several hours, as load materialized higher than forecasted and generator outages were greater than anticipated, Kemmerer said.

ISO-NE's operable capacity analysis assumed unavailable capacity during summer of 2,100 MW based on historical generator unplanned outages. Winter unavailable capacity of 8,600 MW is based on 2014 - 2018 highest historical planned and unplanned generator outages plus the highest amount of historical assumed gas-fired generation at risk during the three week winter peak load period, according to ISO-NE.

The winter peak is lower than the summer peak in New England, but the concern is that some of the region's capacity may be unable to get the fuel needed to operate at times during the colder winter days, Blomberg said in an email Wednesday.

"The concern during the winter is about energy (or operable capacity), not installed capacity," Blomberg said, and she stressed that the purpose of the analysis is to inform the stakeholders about the projected operable capacity that may be available to system operators and whether the ISO's operating procedures would be able to maintain reliability under the assumed scenario.

"The analysis is not a prediction of what the actual conditions will be in the years studied," Blomberg said.

-- Jared Anderson,

-- Edited by Richard Rubin,