The annual capacity auction is a method used by ISO-New England, the folks who run the six-state power grid, to ensure that we will have enough electricity even when circumstances are dire. Power plants tell them how much electricity they can guarantee to produce on demand three years from now and if their price is low enough they receive a per-MW payment for that guarantee, regardless of whether they ever have to generate that power.
The idea is to provide an incentive for power plants to do expensive things like stockpile extra fuel or tweak staffing levels so they can be ready, although critics say it has become a subsidy for traditional systems that is slowing the energy transition.
The latest auction, for three years from now, was recently held. From ISO-NE:
The latest auction (17th Forward Capacity Auction or FCA 17) secured capacity commitments of 31,370 megawatts (MW) available in the 2026/2027 commitment period, at a preliminary price of $2.590 per kilowatt-month (kW-month) in virtually all cases. That’s slightly below last year’s clearing prices that ranged from $2.531 per kW-month to $2.639, although well above the record low of $2.001 per kW-month in 2020.
New and existing solar and wind generation, energy storage, and demand resources secured obligations totaling more than 5,000 MW, accounting for about 16% of all capacity clearing the auction. New solar generation and energy storage resources, or facilities combining the two, secured obligations totaling 519 MW. This accounted for the majority of new generating resources, which also included wind and a small amount of hydroelectric resources. More than 350 MW of new and existing wind resources cleared the auction.
Details about individual power plants will be forthcoming in a few weeks. New Hampshire will be looking especially at the Merrimack Station in Bow, the region’s last coal-fired power plant. It gets hundreds of millions of dollars in capacity auction payments.