ISO-NE: Renewables are driving up capacity market prices
The rise of renewables in New England is keeping prices down in electricity markets, but at the same time driving up costs in the capacity market. According to the ISO, traditional generation sources are forced to price their capacity higher to offset a loss of revenue in the electricity markets because renewables — sans fuel costs — are dispatched first.
“Additional renewables are expected to decrease wholesale electric energy prices, which will result in increased capacity prices to ensure resource adequacy,” the ISO said in a discussion paper. “The shift in revenues from the energy to the capacity market will also affect the resource mix, putting additional financial pressure on energy market dependent resources.”