ISO-NE releases discussion paper on the role of the capacity market in ensuring a reliable, renewable energy future
On June 3, 2015, ISO New England released a draft of a discussion paper, The Importance of a Performance-Based Capacity Market to Ensure Reliability as the Grid Adapts to a Renewable Energy Future. The paper details the interdependency between the energy and capacity markets and explains how these markets will respond to increasing levels of renewable resources. Among other things, the paper explains how renewable resources are expected to put downward pressure on energy-market prices which, in turn, puts upward pressure on capacity-market prices. As the energy market provides fewer opportunities for resources to recover their fixed costs, the capacity market will play a key role in balancing the revenue needs of existing resources to ensure reliability is maintained.