Market Update

Published: November 13, 2024

In mid–October, ISO-NE updated the Annual System Peak report to include the 2024 peak. Although it is listed as “preliminary,” the report indicates the peak occurred on July 16th from 5:00 to 6:00 PM at 24,366 MW. This differs from what was initially reported; ISO-NE’s Morning Report on July 17th indicated that peak demand on the 16th was 24,310 MW at hour ending 7 PM (6:00 – 7:00 PM). However, subsequent Weekly Market Summaries indicated 24,366 MW at hour ending 6 PM (5:00 – 6:00 PM). Reconciliation of the data has resulted in a change in the peak hour initially reported more often in the past few years. Although the peak is subject to change with additional data, historically the preliminary peak, once published by ISO-NE, has not changed.  

As we have noted in prior articles, the addition of Behind-the-meter (BTM) solar, expansion of utility curtailment programs and more widely varying weather patterns are making it very difficult to predict when the Peak may occur with BTM pushing the peak to later in the afternoon/early evening as opposed to mid-afternoon. Last year we saw the first ever peak in September. Through July 17th this year, we sent seven curtailment notices with the first one on June 19th, exceeding the number of notices sent in any year since 2009. July 17th was the second notice of three days in a row that week and of the seven days that curtailment was recommended, the 16th was the only day that demand reached or exceeded the projection. Table 1 summarizes the curtailment notices sent this past summer. 

Table 1 – Summer 2024 Curtailment Notices 

As indicated below in Table 2, annual electricity use has gradually declined over the past 20 years, but the annual system peak has remained relatively consistent. The peak this summer was the fourth lowest compared to the previous eight years as shown in Table 3. 

Table 2 – Annual Electricity Use

Table 3 – Historical Annual System Peaks 

Annual System Peak Voluntary Curtailment Program Future Annual Peak Changes

The annual system peak is the single hour in the calendar year when electricity demand throughout New England is highest. That hour is most likely to occur during the summer on the hottest and most humid weekday in late afternoon. Each year we send curtailment notices during the summer to customers when we think the peak may occur, recommending curtailment between 4-7 pm.

The peak hour establishes each electricity account’s capacity tag based on its load during that hour and becomes effective the following year beginning June 1 for a 12-month period. The annual system peak is essentially the sum of the capacity tags for all accounts combined. ISO-NE bases its planning for electricity generation to ensure adequate supply during that peak demand hour. The cost of capacity is established through the Forward Capacity Market auction process.

Every account’s electricity supply cost includes a charge for capacity based on its capacity tag. By curtailing during that peak hour, an account can reduce its capacity tag, and thus the associated cost going forward (depending on the timing and term of their retail supply contract). Additionally, curtailment during that peak hour helps ISO-NE to reduce the need for new future generation.

Future Annual Peak Changes

As we have mentioned in prior articles, New England was a Winter-peaking region prior to the early 1990’s. Since then, the New England grid has shifted to a summer-peaking system as a result of the significant increase in air conditioning and reduction in electric heating.

The New England grid is expected to shift back to a Winter-peaking system by 2032 based on ISO-NE’s current studies, largely due to the electrification of heating demand.  Additionally, during the same time period solar generation is expected to double from 6,000 MW currently to almost 12,000 MW including behind-the-meter solar, helping to reduce summer demand on the grid. The shift to a winter peak will occur gradually and add to the complication of estimating when it may occur.