ISO-NE this week launched its effort to revamp its resource capacity accreditation process, a key fix to the capacity market that has been tied in with discussions around the contentious minimum offer price rule.
In a presentation to NEPOOL Markets Committee on Tuesday, ISO-NE’s Steven Otto laid out the beginnings of the RTO’s thinking and offered some early hints as to where it’s leaning as it prepares a more detailed proposal in the coming months.
The goals of the project are to boost reliability and maintain cost effectiveness as New England moves toward a decarbonized grid. The RTO’s current accreditation process is a mishmash of approaches that the grid operator has acknowledged doesn’t do a good enough job reflecting different energy sources’ contributions toward resource adequacy and reliability.
One of the key decisions that ISO-NE is thinking through, Otto said, is whether to employ an average or marginal approach to capacity accreditation.
The pros and cons of marginal and average approaches to capacity accreditation | ISO-NE
Marginal approaches “set a resource’s accredited capacity based on the marginal reliability impact of an incremental change in size,” he said. Average approaches, on the other hand, set the accredited capacity based on the average reliability impact of a resource’s class.
The RTO is currently leaning toward a marginal approach, Otto said, sometimes also called a Marginal Reliability Impact value.
The advantages of a marginal approach, according to ISO-NE, are that it sends accurate entry and exit signals to market participants, can incorporate interactions between resource types, and provides the same compensation to resources that provide the same service.
It’s far from a settled conversation though: The grid operator is planning a roughly yearlong stakeholder process to hash out the details and decide on a proposal to send to FERC.
The first phase, involving conceptual design and education, is planned to go through October of this year. The RTO will start presenting a detailed design in November and move to finalize that design and produce tariff language by next spring. Stakeholder committee votes are planned for May and June of 2023.
Feedback on capacity accreditation will come both through the stakeholder process and outside of it: The Massachusetts Attorney General’s Office, for example, is planning to produce a report with recommendations in the coming weeks.