Tuesday, January 15, 2013

No Capacity Value, no capacity payment, and no ability to set price

It takes a certain audience to appreciate this, but it seems they just cant' figure out how to bid into capacity markets with generation that has no/little capacity value.
It also seems that generation with no capacity value is treated as a price taker, instead of bidding into the New England market with below-cost prices.

New England Wind Forum: ISO New England Updates:
The New England Power Pool (NEPOOL) FCM Redesign Working Group worked all year to reach consensus on a framework for the re-design of the FCM following an almost complete lack of support for the proposed ISO-NE compliance filing at the Markets Committee in November 2011. In April 2011, FERC issued an order in the New England FCM re-design proceedings, Docket ER10-787, rejecting the two-tiered pricing proposal from ISO-NE in 2010. FERC instead called for ISO-NE to implement a form of buyer-side market power mitigation similar to those in place in PJM and the New York Independent System Operator (NYISO). Under a minimum price rule, policy-driven renewables, including wind generators, would be seen as "out-of-market" and prohibited from offering in the auctions below a price deemed "competitive" by ISO, a price expected to be above market clearing prices. Proposals to provide renewables with an exemption from this rule, allowing new renewable capacity to continue to have the option to offer in the auctions as price takers, have so far failed to garner sufficient support for adoption. Without such an exemption, it is unlikely that any new renewable resources (including those that cleared for the first time in FCA 6 or FCA 7) will clear in the forward capacity auctions and reap any capacity market revenues.

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