Capacity Prices

NYISO Capacity Market (ICAP Demand Curve)

NYISO’s capacity market uses a downward-sloping demand curve — as surplus capacity increases, the clearing price decreases. This creates a market signal: tight systems drive high prices incentivizing new builds; flush systems depress prices.

Demand curve parameters are reset through the Demand Curve Reset (DCR) process. Modo Energy tracks these updates as they are brought online, including changes to seasonal auctions and reference units.

Prices clear monthly for four nested localities (a Zone J generator contributes to NYC, G-J, and NYCA simultaneously):

Reference unit

The demand curve reference unit is a two-hour BESS for the 2025 to 2029 period, as established by NYISO in the current Demand Curve Reset. From 2030 onward, the model reverts to a gas turbine reference unit, consistent with Potomac Economics’ independent market monitor recommendation.

BESS Capacity Accreditation Factors (CAFs)

CAFs are duration-dependent and decline over time as storage penetration increases. CAFs are reset annually by NYISO and will be updated continuously as new values are published.

Longer durations receive higher CAFs (NYCA 2026: 2hr=68.6%, 4hr=81.0%, 6hr=89.0%, 8hr=93.0%).

Renewable CAFs (iCAF Set 1)

Offshore wind TSL floor

Offshore wind in constrained localities has RA availability (37.6%) exceeding transmission security availability (10.0%). The 27.6% gap is added to local requirements as a “TSL floor” — a 1,000 MW offshore wind farm in NYC adds 353 MW supply but increases NYC requirement by 276 MW, yielding only 77 MW net benefit.

Thermal uplift degradation

NYISO capacity auctions include a winter uplift, where thermal generators can offer more installed capacity due to cold-weather efficiency gains that increase output relative to summer ratings. As thermal units are retired and replaced by non-thermal resources, fewer generators are available to capture this uplift, eroding the aggregate winter premium over the forecast horizon.

Data sources