On March 9, 2022 ISO-NE published the results of Forward Capacity Auction 16 (FCA 16), which was held on February 7th, 2022. The auction closed with adequate power system resources to meet peak demand for the capacity commitment period spanning June 1, 2025 through May 31, 2026.
The purpose of the Forward Capacity Market (FCM) is to send price signals to the market that maintain existing capacity resources and attract new capacity resources, when and where they are needed in ISO-NE. This is important to rate payers because the structure of the ISO-NE FCM also provides visibility into the expected cost of capacity three years in advance of when it utilized, and that capacity cost is part of what suppliers use to determine the rates they offer.
The annual auction has capacity resources compete to obtain a capacity supply commitment for a specific capacity commitment period, in exchange for a market-priced capacity payment. In the FCA format, the price for capacity starts high enough to attract more than enough resources to meet the capacity requirements of ISO-NE and then is decreased until the quantity of capacity remaining in the auction equals the quantity of capacity needed (supply meets demand).
This year’s auction saw the qualified participation of 38,602 MW of capacity resources, including 33,356 MW of existing capacity and 5,246 MW of new capacity from 302 new resources. The auction ended after 4 rounds of competitive bidding which secured capacity commitments of 32,810 MW, exceeding the net installed capacity requirement of 31,645 MW needed to meet the reliability requirements of ISO-NE.