Internal Market Monitor releases 2021 Annual Markets Report
New England’s average wholesale energy prices rose to their highest levels in seven years in 2021, according to the latest annual report by ISO New England’s Internal Market Monitor (IMM).
High natural gas prices drove higher prices in the energy markets, leading to a 38% year-over-year increase in the total wholesale market cost of electricity, which rose from $8.1 billion in 2020 to $11.2 billion last year. The increase followed record-low energy prices recorded during the first months of the COVID-19 pandemic.
The region’s wholesale electricity markets performed well and were competitive in 2021, the IMM’s 2021 Annual Markets Report concluded.
Other highlights from the report include:
- The cost per megawatt-hour (MWh) of load served last year was $94, compared to $69 in 2020.
- The average price in the Real-Time Energy Market was up 92% year over year, at $44.84/MWh. The average price in the Day-Ahead Energy Market was up 97%, at $45.92/MWh.
- Energy market costs totaled $6.1 billion, up 104% from 2020. Natural gas prices drove the increase, rising 120% year over year. A small increase in wholesale electricity demand also contributed to higher energy prices. Energy costs accounted for 55% of the year’s total wholesale electricity costs, compared to 37% in 2020.
- Capacity costs totaled $2.2 billion, down 16% from 2020. The decrease reflected lower combined clearing prices and surplus cleared capacity in the eleventh and twelfth Forward Capacity Auctions (FCAs 11 and 12), which were conducted in 2017 and 2018, respectively.
- Regional network load costs, which pay for the use of transmission facilities, reliability, and certain administrative services, were $2.7 billion, up 15% from 2020. The primary driver was a 12% increase in costs for infrastructure improvements.
Released each spring, the Annual Markets Report presents an assessment of each of the ISO’s wholesale electricity markets, based on market data, performance criteria, and independent studies.