Carbon pricing and clean-energy mandates are modeled at the regional and state level. Because these programs do not apply uniformly across the Eastern Interconnection footprint, this page documents each program once and notes which ISOs and states it constrains.
| Program | Type | Applies to |
|---|---|---|
| RGGI | CO2 cap-and-trade | NYISO and ISO-NE in full; the NJ, MD, DE, and VA portions of PJM. Not MISO (and not PJM’s PA load). |
| MA EGEL (310 CMR 7.74) | State CO2 mass-based cap | Massachusetts fossil generators ≥25 MW, on top of RGGI (NEMA, SEMA, WCMA zones) |
| NYISO ISC | Storage revenue subsidy | NYISO-sited battery storage (competitive solicitation) |
| MA CPES / CPEC | Clean peak storage incentive | Massachusetts-sited storage (NEMA, SEMA, WCMA zones) |
| Federal PTC / ITC | Production & investment tax credits | All ISOs (embedded in CEM investment economics) |
RGGI carbon budget
The Regional Greenhouse Gas Initiative (RGGI) is a cap-and-trade programme covering CO2 from power plants in the northeastern states. Generators in member states must purchase allowances at quarterly auctions; the cap declines annually. Only generators located in RGGI member states face the constraint.
| Parameter | Value | Source |
|---|---|---|
| 2024 regional cap | ~91 million short tons CO2 | RGGI Model Rule |
| Annual decline | 2.275% per year (2024+) | RGGI 2024 Interim Control Period |
| CCR Tier 1 trigger | ~$15.37/short ton (2024, +7%/yr) | RGGI Model Rule |
| CCR Tier 2 trigger | ~$26.32/short ton (2024, +7%/yr) | RGGI Model Rule |
| CCR volume (each tier) | 10% of base cap | RGGI Model Rule |
The capacity expansion model enforces the declining RGGI cap, with the CCR tiers releasing additional allowances at their triggers, and produces the resulting allowance-price path. That path is seeded into the dispatch model, where generators obligated under RGGI pay it as a per-megawatt-hour carbon adder: plant-specific emissions intensity (tCO2/MWh, from heat rates and fuel CO2 content) times the allowance price. This raises the marginal cost of fossil generation in member states, and as the cap tightens it accelerates economic retirements. Only generators located in RGGI member states carry the adder.
The modeled allowance price rises from about $35/tonne in 2026 to roughly $95/tonne by the late 2030s as the cap tightens, then eases toward the mid-$80s by the mid-2040s.
| Input | Source | Link |
|---|---|---|
| RGGI cap schedule and CCR parameters | RGGI Model Rule (2024 revision) | RGGI Model Rule |
| RGGI auction clearing prices | RGGI Auction Reports | RGGI Auctions |
| RGGI member state list | RGGI website | RGGI States |
State emissions policies
ISO-NE — Massachusetts EGEL (310 CMR 7.74)
Massachusetts operates the Electric Generator Emission Limits (EGEL, 310 CMR 7.74), a mass-based declining CO2 cap that applies to fossil-fuel generators ≥25 MW located in Massachusetts, on top of RGGI. Where RGGI sets a regional allowance price, EGEL imposes an additional state-level tonnage ceiling that tightens separately from the RGGI cap.
In the model, EGEL is applied as an exogenous cost adder ($/MWh) to Massachusetts generators, calculated from each plant’s emissions intensity (tCO2/MWh) and the modeled EGEL carbon price. This raises the marginal cost of MA fossil generation above the RGGI-only level and accelerates retirements in NEMA, SEMA, and WCMA zones.
| Input | Source | Link |
|---|---|---|
| EGEL cap schedule and covered-facility list | MA DEP 310 CMR 7.74 | 310 CMR 7.74 |
State storage mandates
State storage mandates act as buildout floors and ceilings in the near term across several MISO states (for example Illinois, Michigan, Minnesota, Missouri, and Indiana) and ISO-NE states (for example Massachusetts and Connecticut).
Storage incentives
State-level storage incentives create additional revenue streams beyond energy and capacity. Two are modeled explicitly.
ISO-NE — Clean Peak Energy Credits (CPEC)
Massachusetts operates the Clean Peak Energy Standard (CPES), which generates Clean Peak Energy Credits (CPEC) for battery storage that discharges during designated seasonal peak windows. Credits apply only to assets sited in Massachusetts zones (NEMA, SEMA, WCMA).
Peak windows are designated by the Massachusetts Department of Energy Resources (DOER) and carry multipliers up to 25× during the highest-stress hours, reflecting the premium placed on clean energy during summer and winter peak periods.
In the model, CPEC revenue is calculated as a post-solve revenue stream: the CPEC strike price multiplied by peak-window discharge hours in each season. It does not affect the dispatch optimization. The battery optimizes against day-ahead energy prices, and CPEC revenue is applied afterward.
See Dispatch Model for how CPEC interacts with the full ISO-NE revenue stack.
| Input | Source | Link |
|---|---|---|
| CPEC strike price and peak window definitions | MA DOER CPES program | MA DOER CPES |
NYISO — Indexed Storage Credit (ISC)
The Indexed Storage Credit (ISC) is NYISO’s 15-year availability-based subsidy for battery storage, awarded through competitive solicitation. Three tenders are planned through 2030, targeting approximately 1,000 MW per tender.
The ISC is an indexed contract: payments adjust monthly based on what the battery “should have earned.” When market revenues fall short of the strike price, the ISC tops up income; when revenues exceed it, the developer returns part of the windfall.
Monthly payment = (Strike Price − Reference Price) × MW × Duration × Days
Where the Reference Price = REAP (energy value proxy) + RCP (capacity value proxy). The strike price is based on Gross CONE from the NYISO Demand Curve Reset (DCR), escalated annually by a weighted composite of construction labor, battery costs, materials, and GDP deflator.
See Dispatch Model for full contract mechanics, clawback cap, and escalation weights.
Federal tax credits
PTC and ITC values by technology are embedded in the CEM investment economics, reducing the effective CAPEX of eligible renewables and storage. These apply across all modeled ISOs.