Independent Consultant Study to Establish New York ICAP Demand Curve Parameters for the 2021/2022 through 2024/2025 Capability Years – Final Report
White Paper, 2020
On April 9, 2021, the Federal Energy Regulatory Commission (FERC) issued its initial order in Docket ER21-502-001, largely adopting the recommendations of the New York Independent System Operator (NYISO) for the Installed Capacity (ICAP) Demand Curves, which derived from the recommendations of an Analysis Group study conducted for NYISO during the 2021–2025 ICAP Demand Curve Reset (DCR) process.
An Analysis Group team that included Principals Paul Hibbard and Todd Schatzki, Vice President Christopher Llop, and Manager Charles Wu, worked with NYISO and market participants through a more than yearlong stakeholder process before issuing a final report in September 2020. In developing its recommendations, the Analysis Group team reviewed a wide range of technology and financial modeling choices, including a review of the most likely peaking plant technology to enter the market with the lowest available fixed costs and highest variable costs. The 2021–2025 DCR process was conducted in the context of New York’s 2019 Climate Leadership and Community Protection Act (CLCPA), which initiated a process to decarbonize the power sector over the ensuing decades. Therefore, for the first time, the Analysis Group DCR study included both fossil fuel and battery storage units as potential peaking plant technologies. Our team modeled potential net energy revenues available to the alternative units, including consideration of natural gas availability and costs for the fossil units, and calculation of potential price arbitrage opportunities for the battery storage units. Finally, the team conducted an assessment of likely financial risks and a developer’s likely cost of capital for such a project. After submitting its final report, and in support of the NYISO DCR filing with FERC, the Analysis Group team offered several affidavits attesting to its analysis.