ISO-NE Acquires Low-Priced, Surplus Capacity
Last Monday, ISO New England’s annual Forward Capacity Auction (FCA) for 2020-2021 yielded low capacity prices. ISO-NE, the New England electricity grid operator, holds FCAs three years in advance to ensure that the grid has sufficient resources to meet electricity demand. In past years, the clearing prices have been quite high. This year’s auction, however, produced a low clearing price of $5.30 per kilowatt-month for 2020-2021. To illustrate how this year’s auction compares with previous years, below are the FCA results since the auction’s inception:
Year NEMA Auction Clearing Price (in $ per kW-month)
In the auction, 40,463 MW in resources competed to provide 34,075 MW of capacity. The auction concluded with 35,835 MW in capacity commitments, representing a 1,760 MW surplus. Competition and surplus generation created a low clearing price indicating an effective auction process and capacity market.