Overview

The Eastern Interconnection model is an hourly zonal production cost model covering four interconnected ISOs: NYISO, PJM, ISO-NE, and MISO. It simulates wholesale electricity market outcomes — prices, dispatch, flows, and emissions — from 2026 through 2050.

Eastern Interconnection

NYISO consists of 11 load zones (A through K), each with zone-specific gas hub pricing and reserve requirements. PJM, ISO-NE, and MISO are modeled at the zonal level using EIA-930 balancing authority boundaries.

NYISO Zones

Inputs

Modeling

Two-stage unit commitment and dispatch

The model runs in two stages per day. The unit commitment stage determines which thermal generators are online using binary on/off variables and MIP solving. The economic dispatch stage fixes those commitment decisions and re-optimizes generation output as a pure LP, yielding locational marginal prices from shadow prices on the power balance constraint.

Separate wheeling hurdle rates are applied at each stage — commitment hurdle rates in UC, dispatch hurdle rates in redispatch — reflecting the difference between scheduling and real-time congestion signals.

Operating reserves

Operating reserves ensure sufficient spare generation capacity is available to respond to unexpected outages or demand spikes. The model enforces a minimum reserve requirement at each node, based on a percentage of load. When available reserves fall short, a reserve penalty price is added to locational prices, reflecting the increased cost of maintaining reliability.

Emissions and RGGI

Generators in RGGI member states face a regional CO2 budget constraint. When the carbon shadow price exceeds trigger levels, the Cost Containment Reserve (CCR) releases additional allowances in two tiers. A high-penalty slack variable ensures feasibility if emissions exceed the budget plus CCR volumes.

Ancillary services

Ancillary service prices for NYISO are predicted using a machine learning model trained on historical zonal market data. Four products are modeled:

• 10-minute spinning reserve — zonal pricing, discharge only
• 10-minute non-synchronous reserve — zonal pricing, discharge only
• 30-minute operating reserve — zonal pricing, discharge only
• NYCA regulation — system-wide pricing, symmetric (charge and discharge). NYISO pays a single capacity price for regulation regardless of direction.

Predictions are generated from solved PCM outputs and feed directly into the dispatch model for co-optimized battery revenue estimation.

Outputs

Macro databook

Annual system-level metrics compiled from hourly solve outputs:

• Generation by technology — system-wide and per-ISO splits
• Zonal prices — annual average, TB4 and TB2 spreads (top-bottom price volatility)
• Peak demand — summer and winter by zone
• Emissions — total CO2 and carbon price shadow values
• Capacity prices — NYISO ICAP demand curve auction clearing prices by locality

Site-specific databook

Monthly and annual BESS metrics for individual storage assets:

• Revenue — energy arbitrage and ancillary services
• Cycling — charge/discharge cycles and degradation
• Capacity factors — utilization by market product

Capacity prices

NYISO ICAP demand curve-based capacity prices are calculated for four nested localities: NYCA (statewide), G-J Locality, NYC, and Long Island. Prices clear monthly at the intersection of UCAP supply and a downward-sloping demand curve. These feed into the dispatch model’s capacity and ISC revenue calculations.

Dispatch model revenues

The dispatch model produces site-specific revenue forecasts broken down by stream: energy arbitrage, ancillary services (4 NYISO products), capacity market payments, and ISC contract payments. See the Dispatch Model for methodology.