Our Q1 Capacity Watch™ provides clients with an in-depth outlook on PJM, ISO-New England, and NYISO Capacity prices.

This report looks at:

• ISO-New England Capacity Price forecast for FCA16
• PJM BRA (Base Residual Auction) forecast for Capacity prices
• NYISO – review of the impact of LCR and IRM on Capacity Prices

For ISO New England, we review the results for the Fifteenth Forward Capacity Auction (FCA15) recently conducted by ISO New England. The capacity auction cleared with a price of $2.61 for the Rest-of-Pool capacity zone, $3.98 for the Southeast New England Zone, and $2.48 for the Northern New England zone.

Looking ahead to FCA16, a growing surplus due to new capacity additions and an expected decline in the Installed Capacity Requirement will result in additional delisting of capacity resources and a continued downward trend in the clearing price.  We also produce an ISO-NE Capacity long-term forecast of Capacity Prices.

In PJM, parameters have been released for the 2022/23 BRA, scheduled for May 2021. With a lower forecasted peak load, auction clearing prices are expected to decline in all PJM locations. Beyond the 2022/23 BRA, PJM will be holding auctions approximately every six-and-a-half months until it is caught up to the normal three-year-ahead schedule in May 2024 when it conducts the BRA for 2027/28. The longer-term outlook of Capacity prices in PJM will be affected by additional expected changes in market power mitigations rules, with both the Market Seller Offer Cap and Minimum Offer Price Rule under review.

In New York, the 2021 Summer Capability Period will begin in May. In our NYISO Capacity long-term forecast, we look at the upcoming summer capability period and a 10-year forecast of capacity prices based on new generation projects forecast to come onto the grid, and upcoming retirements.  Compared to last summer, prices are expected to decline substantially for New York City, due to lower forecasted peak load and a drop in the Locational Capacity Requirement. Prices for the Rest-of-State region are expected to increase relative to last summer due to a higher Installed Reserve Margin Requirement. The Net CONE value that used to set the demand curves in New York is still pending with FERC. If the demand curve parameters are not approved by mid-April, the current Net CONE value will carry-over temporarily.

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