Procuring Electrical Capacity in ISO New England

Author: Velocity Suite Power Markets Analyst

ISO New England (ISO-NE) has released their 10th Forward Capacity Market results for the period of June 1, 2019 through May 31, 2020. The purpose of a Forward Capacity Market (FCM) is to create a system that allows for reliable supply of electrical capacity in the future. It also adds competitive prices for all new and existing resources that participate. Capacity resources can consist of power plants, imported capacity from outside the ISO or demand resources. Demand resources are anything that help to reduce consumption, i.e. energy efficient appliances or the use of on-site power generators.

ISO-NE was able to close this recent capacity auction with a 23% lower price than the previous year’s auction. To accomplish this, ISO-NE divided its footprint into two zones: Rest of Pool (ROP) and Southeastern New England (SENE). ROP will include Connecticut, western and central Massachusetts, Vermont, New Hampshire and Maine. SENE will include northeast Massachusetts and the Greater Boston area as well as southeast Massachusetts and Rhode Island. SENE was created based on existing transmission limitations that restrict the amount of power that can be imported into the area.

ISO-NE added over 1300 MW of new plant capacity to the FCM with Burrillville Energy Center 3 in Burrillville, RI, NRG Energy’s Canal 3 project in Sandwich, MA and Bridgeport Harbor 6 in Bridgeport, CT. These are all dual-fired plants that are located in areas that have experienced previous capacity shortfalls.

Other additions include 6.8 MW from Deepwater Wind’s offshore wind farm currently under construction off the coast of Block Island, RI, with a total planned capacity of 34 MW.

ISO-NE Future Online Capacity
ISO-NE has taken extra steps to understand the needs of its future markets and is effectively mitigating risk for market participants while adding sufficient capacity to keep the lights on. The aforementioned 23% drop in prices from last year’s auction was achievable due to the addition of new power generation in key areas, incorporating forecasted renewable generation growth, importing electricity from sources outside the ISO-NE footprint and utilizing energy efficient demand resources.

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ISO-NE Capacity Auction Press Release – 2/11/16