Stepping Stones to FCA16 and Beyond | Capacity Watch Blog

Published August 12th, 2021 | capacity-watch

Multiple Filings and proposals have yet to be decided by FERC. 

Capacity Watch™ provides clients with an in-depth outlook on PJM, ISO-New England, and NYISO Capacity prices.  In this blog, we highlight a portion of the analysis in the ISO-New England section of the Q2 Capacity Watch™.

ISO-NE is likely to see multiple changes leading up to the February 2022 FCA16 with many filings and proposals yet to be decided upon by FERC. While FERC has issued its ruling on Offer Review Trigger Prices (ORTP’s), the compliance filings on Net CONE and the MOPR and its subsequent proposals are still up in the air. 

Based on a recent FERC request, ISO-NE has updated the costs associated with the reference unit, which bolstered Gross and Net CONE by $0.30-1.00 since the March 2021 filing, but are still under the FCA15 values. 

  • Higher Net CONE = upward shift in MRI demand curve = higher clearing prices 

 …However, ESAI predicts de-list bids to take center stage in the near future. 

ISO-NE and NEPOOL both offered ORTP values for the FCA16, with $10+ spreads between the two. To the shock of market participants, FERC accepted the proposal that kept ORTP at the starting price….keeping offshore wind “MOPRed” out of the FCA and shifting the burden to developments for unit-specific offer floor requests. 

MOPR Reforms are still underway with a goal to make the necessary updates without jeopardizing the structure for efficient price signals. It is clear these reforms will take a few years to fully flesh out, but in the meantime, ESAI expects ISO-NE to implement a set of short-term enhancements to keep things moving forward while the official MOPR is being established. Beyond FCA17, the development of long-term solutions is ongoing. 

ESAI’s FCM forecast has been updated with several new parameters that has ultimately driven price expectations to trend upwards. Subscribers can access our recent Capacity Watch ISO-NE section for a deeper dive into price drivers and our long-term FCM forecast.   If you’re not a subscriber, fill out this form or email tbausemer@esai.com to enquire about a free trial.

For more information about our Capacity Forecasts, see our Capacity Market Coverage.

Capacity Watch Blog

Learn About Renewable Energy

Renewable Energy Graphic

ESAI Power evaluates the renewable energy issues, markets and trends in the PJM, New York, and New England market footprints. Coverage includes solar, onshore and offshore wind, hydroelectric, and storage. For each region, ESAI Power details the regulatory and market factors that impact the supply and demand balance for Class I Renewable Energy Credits (RECs) and projects the supply and demand balance of Class I RECs through 2030.

Learn About Capacity Watch

Capacity Watch Graphic

Capacity WatchTM – Provides quarterly analysis of capacity markets and policy issues that impact capacity price outcomes over a 10-year forecast horizon. Also provided is an evaluation of the outlook for the construction of each generation project in PJM, New York, and New England. Every project is assigned a “probability of completion” factor in percentage terms which is then applied to develop a forward assessment of likely capacity additions within a particular pool. The impacts of new generation and retirements on reserve margin surpluses and forward capacity market values is updated and presented in each issue. ESAI’s project database (Project Evaluation ProgramTM) is updated and presented with each issue.

Learn About Energy Watch Quarterly

Energy Watch Quarterly Graphic

Energy Watch QuarterlyTM provides a quarterly analysis of market and policy issues affecting energy pricing dynamics over the next 10-year period for both the power and natural gas sectors. This analysis includes forecasts of pool-wide and zonal energy prices in New England, New York, and PJM, including forecasts of fuel inputs. Supporting assumptions are provided in each quarterly report.