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FERC accepts capacity requirements for 2020/2021

The Federal Energy Regulatory Commission (FERC) has accepted ISO New England’s proposed Installed Capacity Requirement (ICR) values to be used in the 11th Forward Capacity Market auction (FCA #11), which commences February 6, 2017. The ICR used in the development of the system-wide and zonal demand curves for FCA #11 is 34,075 megawatts (MW).

This year’s ICR calculations continue to account for the demand-reducing effects of behind-the-meter solar photovoltaic (PV) resources. Using the ISO’s long-term forecast of growth in PV resources, the amount of capacity required in 2020/2021 was reduced by 720 MW.

ICR Calculation

The ICR is the amount of capacity (generation, demand-side resources, and imports) the ISO has determined needs to be available in 2020/2021 to meet the region’s projected peak demand, plus required reserves. This value is used in the development of the system-wide and zonal demand curves.  The ICR value is calculated using reliability requirements based on the probability of disconnecting load due to a resource deficiency (also referred to as Loss of Load Expectation or LOLE) no more than once every 10 years (1-in-10). 

Enhanced System-Wide and Zonal Demand Curves

FCA #11 will be the first to use marginal reliability impact demand curves accepted by FERC in June 2016. The enhanced system-wide and zonal demand curves aim to ensure that the auction: acquires sufficient capacity to meet the region’s reliability requirements; provides sufficient compensation to suppliers to ensure adequate investment in the long term; and allocates capacity procurement among the region’s zones in the most cost-effective manner. The new demand curves are convex, and will replace a previously downward-sloping linear demand curve for the region and vertical demand curves for capacity zones. The new curves are designed to give more accurate prices by reflecting the marginal reliability impact associated with adding capacity in specific areas of the power system. The curves also allow the region to acquire more or less than the ICR, depending on reliability requirements and price. Read more about the new marginal reliability impact demand curves.

Local Sourcing Requirement

In a separate order, FERC accepted the ISO’s proposed capacity zones for FCA #11: Rest-of-Pool (Connecticut, Western and Central Massachusetts) Northern New England (Maine, New Hampshire and Vermont), and Southeast New England (Northeastern Massachusetts/Boston, Southeastern Massachusetts and Rhode Island).

In its ICR order, FERC also accepted the Local Sourcing Requirement (LSR) for the import-constrained Southeast New England Capacity Zone (SENE) at 9,810 MW. The ISO has determined the Northern New England Capacity Zone (NNE) to be export-constrained for the 2020/2021 capacity commitment period, and has established a Maximum Capacity Limit of 8,890 MW. Using these values, as part of the new MRI demand curve methodology discussed above, ISO New England has developed an import-constrained capacity zone demand curve and export-constrained capacity zone demand curve for the SENE and NNE capacity zones, respectively.