Home Business framework NYISO’s Plan to End “Buy-Side Mitigation” for Clean Energy Has Wide Support

NYISO’s Plan to End “Buy-Side Mitigation” for Clean Energy Has Wide Support


Diving Brief:

  • The New York Independent System Operator’s (NYISO) proposal to exempt clean energy resources from “buy-side mitigation” – a process that limits the lowest price a resource can bid in capacity auctions – is gaining traction. broad support, according to comments filed Wednesday with the federal government. Energy Regulatory Commission.
  • However, clean energy proponents oppose a key part of the reform package: a “vague” plan for a “marginal capacity accreditation” framework, which NYISO would use to measure the reliability value of resources during peak periods of energy consumption.
  • Potomac Economics, NYISO’s market watch unit, supports the reform agenda. “These proposals provide a capacity market design framework that can adapt to climate policy impacts and maintain reliability efficiently and at a reasonable cost to consumers,” Potomac Economics said, noting that it would shed light. investors on the direction of the New York capacity market.

Overview of the dive:

NYISO proposal at the beginning of January marked a new step in reshaping East Coast capacity markets so that they do not thwart state energy policies.

With support from FERC, NYISO, ISO New England, and PJM Interconnection have passed rules in recent years that limited how small state-subsidized resources, such as wind, solar, and energy storage facilities, could bidding in capacity auctions.

Proponents of the rules have argued that these resources artificially suppress capacity prices. States and other opponents of buy-side mitigation rules, called minimum bid price rules in PJM, have said they interfere with state policy and drive up costs.

These issues are crucial in New York, which requires 70% of its electricity to come from renewable energy sources by 2030 and be emissions-free by 2040.

As part of NYISO’s proposal, which was supported by 82% of its stakeholders, resources that meet New York requirements Climate Leadership and Community Protection Act goals will not face lower limits on their capacity offerings.

The proposal also establishes a fringe capacity accreditation framework that would assign a value to classes of resources based on their location on the network. Resources that provide little additional reliability benefit to an area would be of lower value and receive less capacity revenue. The framework aims to direct the development of resources to areas where they are most needed.

NYISO intends to work with stakeholders to develop the framework’s implementation and technical details so that it can be effective by May 1, 2024.

NYISO has asked FERC to approve its proposal by March 6 so it can be in place for a group of pending interconnect requests.

“The related reform package takes a well-balanced approach in recognizing the procurement resources required by the state in the [installed capacity] markets, while reflecting their marginal contribution to a reliable supply of electricity in New York”, Central Hudson Gas & Electric, Consolidated Edison Co. of New York, the New York Power Authority, New York State Electric & Gas, Niagara Mohawk Power, Orange and Rockland Utilities, the Long Island Power Authority and Rochester Gas and Electric said in common comments.

The marginal capacity accreditation framework will prevent consumers from purchasing capacity that does not provide reliability benefits, the utilities said.

Generally, as capacity for a certain type of resource is added to the system, the reliability benefit of the additional capacity diminishes, the utilities said.

A study by the Brattle Group found that installing 5,000 MW of solar generation would halve the marginal contribution to the reliability of solar resources in summer, and adding an additional 5,000 MW would halve it, said public services.

A coalition of renewable energy advocates supported the plan to eliminate buy-side mitigation for clean energy resources, but opposed the marginal capacity accreditation framework, saying it was “unacceptably vague”.

“Critical questions such as what the methodology will be, who it will affect and how it will affect them, how it will interact with the requirements of the reliability standards, or even when it will come into effect are not specified,” the coalition said, adding that, as proposed, FERC will not review the details.

These details are crucial to understanding how the capability accreditation framework will work in practice, according to the coalition, which includes the Sierra Club, Natural Resources Defense Council, Sustainable FERC Project, American Clean Power Association, Advanced Energy Economy, Alliance for Clean Energy New York, Cypress Creek Renewables, Enel North America, New York Battery and Energy Storage Technology Consortium, Centrica Business Solutions, Tesla, Borrego Solar and Voltus.

Based on “fragments” in NYISO’s proposal, it appears the framework will lead to inaccurate resource adequacy determinations and inaccurate price signals, they said.

“Because NYISO’s revised rate wording is essentially an empty vessel for NYISO to fill as it sees fit, its proposed rate does not provide sufficient notice to customers and market participants of the proposed rate change or how it will affect them.” , the coalition said.