Capacity Prices

NYISO Capacity Market (ICAP Demand Curve)

NYISO clears the Installed Capacity (ICAP) market against its demand curve. 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.

Region-specific data sources

MISO Capacity Market (Planning Resource Auction)

MISO procures capacity through the seasonal Planning Resource Auction (PRA), which clears separately for each of the four seasons. Accredited capacity (UCAP) is cleared against a downward-sloping Reserve-Based Demand Curve (RBDC) at the zonal level, subject to each zone’s import and export limits.

The model clears MISO capacity using one of three approaches, selected by planning year:

• Published clearing (settled auctions): the published seasonal clearing prices are used directly.
• Published PRA inputs (the immediate next planning year): the RBDC is evaluated against MISO’s published supply and Planning Reserve Margin Requirement from its Preliminary PRA Report.
• Rebuilt supply (forward years): retirements and queue/CEM builds are layered onto a reliability-anchored supply stack, the requirement is projected from the load forecast, and the RBDC is re-cleared. Accreditation in these years follows Schedule 53 class averages until the Direct Loss-of-Load methodology takes over from the 2028 planning year.

The RBDC itself is a sloped demand curve that replaced MISO’s older vertical curve, so price now signals scarcity gradually rather than jumping from a floor to the cap. It is re-anchored each year to that year’s reserve requirement.

Zonal clearing and local premiums

Each Local Resource Zone clears at its subregion’s RBDC price unless its own supply cannot meet its local requirement. Three published per-zone parameters drive this:

• Local Clearing Requirement (LCR): the minimum capacity that must clear from inside the zone.
• Capacity Import Limit (CIL): the most that can be imported from neighboring zones to help meet the LCR.
• Capacity Export Limit (CEL): the most that can be exported out of the zone.

When a zone’s local supply plus its CIL falls short of its LCR, it clears at a premium above the subregion price, scaled by the shortfall and capped at the RBDC ceiling. When local supply is sufficient, the zone clears at the subregion price.

Accreditation

MISO accredits capacity by resource class:

• Thermal, nuclear, and hydro use MISO Schedule 53 class-average UCAP/ICAP ratios.
• From the 2028 planning year, accreditation transitions to Direct Loss-of-Load (DLoL) seasonal UCAP values per class.
• Wind and solar are accredited from MISO’s seasonal capacity-credit (DLoL) categories.
• Storage receives a high pre-DLoL accreditation, moving to a season-specific DLoL value.

Planning Reserve Margin Requirement (PRMR)

The seasonal PRMR is a per-LRZ requirement derived from peak load grossed up by a transmission-loss factor and the RTO reserve margin. It is anchored to MISO’s published loss-of-load-expectation (LOLE) based requirement and projected forward using the long-term load forecast’s per-zone peak growth.

Seasonality matters: summer binds first today because accredited supply is lowest relative to peak load, while winter carries the highest demand-curve cap, so winter can clear highest in later years.

Assumptions and caveats

• Capacity is accredited and cleared seasonally (four seasons), not annually.
• Zonal clearing is subject to import/export limits between LRZs.
• Under current supply and load trajectories the forecast clears at the demand-curve cap from the near term onward; the model has no supply-side feedback (high prices do not induce additional builds within the run).
• Per-LRZ supply is mapped from generator geography, so zone-level local-premium results are directional, while subregion and system results are firmer.

Region-specific data sources

PJM Capacity Market (Reliability Pricing Model)

PJM procures capacity through the Reliability Pricing Model (RPM), a forward auction (the Base Residual Auction) that clears prices against a downward-sloping Variable Resource Requirement (VRR) curve. Clearing is nested by Locational Deliverability Area (LDA): the RTO clears first, and constrained LDAs clear at a price at or above their parent.

The model selects a clearing approach by delivery year:

• Observed: for already-cleared auctions, published BRA clearing prices are used directly.
• Projected with cap/floor: for the years covered by the current FERC-approved price cap and floor, the VRR curve is rebuilt from Net CONE and the supply inventory and the result is clipped to the cap/floor band.
• Projected uncapped: for later years (after the cap/floor expires), the same engine clears without the band.

Accreditation

PJM accredits all resource classes using Effective Load Carrying Capability (ELCC): each technology (gas, coal, nuclear, wind, solar, and storage by duration bucket, among others) receives a per-class ELCC rating that scales nameplate to accredited capacity.

Reliability requirement

Each LDA’s reliability requirement is built from its peak load scaled by a forward pool requirement that combines the Installed Reserve Margin (IRM) with the pool-wide accredited-capacity factor. Published requirements are used where available, and projected forward for later years.

Region-specific data sources