In ESAI’s latest Capacity Watch report, we analyze the ISO-New England Forward Capacity Auction, FCA16. Clearing Prices are expected to decline from the FCA15 Auction due to a decrease in Net Installed Capacity Requirements (Net ICR) and Net Cost of New Entry (Net CONE).
About Tom Bausemer
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Entries by Tom Bausemer
High on-peak load levels and gas prices bolster congestion risks in January across ISO-NE and PJM. Winter demand levels are here to stay and are forecasted to be high in every market except for NYISO where temps will be unseasonably warm. Cold-weather seasons are not usually associated with transmission and generator outages, but ESAI has a few outages on our radar that are forecasted to keep all three markets spicy this January.
The most recent RGGI quarterly auction (Auction 54) was held on December 1, 2021. The clearing price was $13.00/ton, nearly 40 percent higher than the clearing price of $9.30/ton on September 8, 2021 (see Figure 1). For the first time since September 2015, the Cost Containment Reserve (CCR) was triggered which is a mechanism of the RGGI program that was implemented to provide additional allowances when auction prices exceed an established price ceiling.
In ESAI’s latest Capacity Watch report, we analyze the three major rule changes that will impact pricing in the upcoming PJM Base Residual Auction (2023/24 BRA) and the subsequent influence on clearing prices out to 2030. These rule changes include FERC’s revised approval of ELCC, a default MSOC based upon Net ACR, and FERC’s failure to reach a majority decision on PJM’s proposed MOPR revisions.
The start of winter signals the end of generator maintenance season and a shift away from supply-stack driven congestion towards load and transmission driven congestion. Certain load pocket zones across the Northeast are susceptible to import constraints leading to elevated congestion risk and higher power prices. ESAI expects high natural gas prices to play a key role in December congestion patterns.
The upcoming winter’s natural gas and power prices outlook for PJM, NYISO and ISO-New England continue to trend up despite the warmer-than-normal weather forecast. The forwards appear overvalued and ESAI Power holds its bearish stance on natural gas and power prices. The markets bullish outlook is based on a recent uptick in delivered gas and global LNG prices, but ESAI Power’s outlook has key insights driving a stable gas and power forecast.
In this Emissions Watch blog, we provide several updates pertaining to the RGGI program, including a review of the recently released Q2 2021 CO2 emissions data for states in the RGGI footprint. Compared to the same quarter last year, emissions were 17 percent higher. ESAI also provides an updated RGGI price forecast, which remains below current OTC prices in the longer-term. In Pennsylvania, the Environmental Quality Board (EQB) approved final regulations to join RGGI last month, but opposition to the state joining the program persists.
New York continues to push ahead with its renewable energy goals. Just last week, the state announced two significant developments during its kick-off of Climate Week. Governor Kathy Hochul announced the winners of its recently established Tier 4 REC solicitation, which sought proposed generation or transmission projects that would deliver renewable electricity into New York City. Additionally, Hochul called for the expansion of the state’s NY-Sun program to achieve 10 GW of distributed solar by 2030 (up from 6 GW by 2025). Both announcements signal the state’s commitment to reach its goal of 70% renewable electricity by 2030.
Weather forecasts across the Northeast power markets continue to call for warmer-than-normal temperatures this summer and elevated electricity demand will be the main congestion driver in August. Planned generator maintenance will be minimal; however, forced generator outages during hot summer weather could significantly impact congestion and be an import constraint on areas across the Northeast Power Pools.
In this blog, we highlight a portion of the analysis in the NYISO section of the recently published Q2 Capacity Watch™. Changes to the New York markets’ supply and demand levels and declining peak load forecasts have sent capacity prices in all directions. New York’s commitment to renewable development has increased considerably in the past year with the approval of CLCPA’s minimum statewide goal of 9 GW of offshore wind by 2035. The upward trajectory of renewables has also shaped LCR and IRM expectations.
- ISO-NE FCA16 Auction Parameters and Capacity Price Forecast | Capacity Watch BlogJanuary 14, 2022 - 3:30 pm
- Record LNG Exports Drive Domestic Demand | Natural Gas Watch BlogJanuary 5, 2022 - 9:23 am
- A New Year (2022) brings New Congestion Risks to PJM, NYISO & ISO-NE | Congestion Watch BlogDecember 20, 2021 - 2:00 pm
- RGGI Auction 54 Update | Emissions Watch BlogDecember 6, 2021 - 8:00 am
- PJM BRA 2023/24 Rule Changes and Auction Parameters: Capacity Price Forecast | Capacity Watch BlogNovember 23, 2021 - 1:00 pm
- Winter Brings New Congestion Risks to Power Prices | Congestion Watch BlogNovember 9, 2021 - 8:00 am
- Northeast’s Inflated Natural Gas and Power Forwards | Energy Watch BlogOctober 20, 2021 - 3:05 pm
- RGGI Update on CO2 Data, Pennsylvania, North Carolina & Massachusetts CO2 Auction | Emissions Watch BlogOctober 15, 2021 - 2:00 pm
- NYISO Renewables Update | Renewables Watch BlogSeptember 27, 2021 - 1:11 pm
- PJM Renewable Capacity Pricing | Renewables Watch BlogSeptember 9, 2021 - 8:00 am
- September Congestion update PJM NYISO & ISO-NE | Congestion Watch BlogAugust 23, 2021 - 2:34 pm
- Stepping Stones to FCA16 and Beyond | Capacity Watch BlogAugust 12, 2021 - 9:45 pm
- ESAI Power Launches Renewables Watch for NYISO, ISO-NE & PJM Wholesale Power Markets | Press ReleaseAugust 4, 2021 - 4:06 pm
- Offshore Wind is Blowing Through NYISO | Energy Watch BlogAugust 4, 2021 - 9:05 am
- Renewable Expansion in NYISO | Capacity Watch BlogJuly 27, 2021 - 10:44 am
ESAI Power is a market research and consulting firm that delivers focused analysis of the wholesale power markets in the Northeast region of the US: PJM, NYISO, and ISO-NE. Since 2001, ESAI has been providing market-focused research product content and custom consulting services for Northeast power market participants including investors (banks, private-equity, & hedge funds) & developers, generation owners & operators, utilities & retail electricity suppliers, regulators & RTOs, traders, and end-users & buyers.