Analysis Group Energy Consultants Review New York Electricity System Capacity Market Design

May 07, 2015

The New York Independent System Operator's (NYISO) current capacity market design functions reasonably well and does not need to be altered, according to a recent report conducted by a team from Analysis Group. In the report, "NYISO Capacity Market: Evaluation of Options," Vice Presidents Paul Hibbard and Todd Schatzki, Manager Craig Aubuchon, and Associate Charles Wu reviewed NYISO's current spot capacity market design and evaluated the potential benefits and drawbacks of moving to a forward capacity market design like the ones used by neighboring power regions. According to the authors, the purpose of the report was to provide NYISO and its stakeholders "with a quantitative and qualitative analysis of the two competing market structures, considering the market designs of other regions, the unique circumstances in New York, and the potential benefits, costs, and impacts of changing the current structure."

The report modeled and evaluated key system differences in market clearing outcomes and impacts, reliability, economic and market effects, and administrative costs, among other factors. "Overall, based on the modeling of potential market outcomes and our evaluation of many tradeoffs between market structures, we conclude that the move to a forward capacity market structure in New York is not warranted," noted the authors. Among their conclusions:

  • The potential price, cost, and reliability benefits of a switch to a forward capacity market design are not high enough to warrant a switch from the current spot market structure
  • The move to a forward market structure would involve significant costs and internal resources over several years, and require substantial stakeholder and regulatory reviews
  • The associated reliability and economic benefits of a switch to a forward capacity market are not strong enough to overcome the associated drawbacks

Read the report