Analysis Group White Paper Identifies Options to Enhance Resource Performance in New York

November 30, 2017

For the New York Independent System Operator (NYISO), Analysis Group developed a white paper identifying and assessing future electricity market design alternatives. The paper, titled “Capacity Resource Performance in NYISO Markets: An Assessment of Wholesale Market Options,” focuses on requirements for and incentives tied to the performance of resources that provide electric capacity to meet NYISO resource adequacy obligations, and in particular, the reliability of these capacity market resources under stressed system conditions (e.g., winter and summer peak days).

The white paper includes a summary of recent changes in the industry that heighten reliability risks, such as: a steady and persistent decline in energy market prices due to, among other things, low-cost shale gas; the retirement of uneconomic coal, oil, and natural gas generating capacity; an increase in regional dependence on natural gas, paired with slow pipeline infrastructure development; and, rapid growth in renewable and demand response resources.

Considering these risks, and based on analysis of NYISO electricity market data and a review of market design changes undertaken by other regional transmission organizations (RTOs), the Analysis Group team developed a number of options for NYISO and stakeholders to consider that may enhance the current design of the region's capacity market. These options include: altering methods of calculating resource availability; modifying resource eligibility requirements; and implementing rule changes that increase revenue for resources that perform well during shortage or scarcity conditions. Analysis Group's assessment suggests a potential for both improved cost-effectiveness and improved overall reliability.

NYISO plans to engage stakeholders in discussions on the merits of potential market design changes in consideration of the Analysis Group report. The report was prepared by Principal Paul Hibbard, Vice President Todd Schatzki, and Associate Sarah Bolthrunis.

Read the white paper