Most MISO zones clear capacity auction at $10/MW-day

Dive Brief:

Results of the the Midcontinent Independent System Operator's sixth annual Planning Resource Auction, which ensures adequate capacity for the planning year beginning June 1, 2018, showed "adequate availability of resources," grid officials said last week.
Resources in Zone 1, in the Northwest portion of MISO's footprint, cleared at $1/MW-day while all other resources cleared at $10/MW-day.
Prices were generally higher than last year, but are still low by comparison to recent years. An increase in the planning reserve margin requirement played a role, MISO officials said.

Dive Insight:

Several factors contributed to the significant rise in capacity prices across most of MISO, but officials say they are still low compared to recent auctions. In 2016, for instance, retirements and capacity exports contributed to higher clearing prices in several zones. That year, local resource zones 2, 3, 4, 5, 6 and 7 each cleared at $72.00/MW-day.

MISO in a statement said the most recent results reflect "an increase in the planning reserve margin requirement, a decrease in supply and changes in market participant offer behavior."

The grid operator said it is seeing growth of "non-traditional resources" to meet capacity needs, noting that the auction cleared about 1,600 MW more demand response, energy efficiency and behind-the-meter generation than it did the year before.

Those resources represent about 11,000 MW of the total, according to MISO, or about 8% of resources.

The results reflect "an adequate availability of resources for the planning window and the grid’s capability to effectively and efficiently transfer resources among local resource zones," MISO Executive Director of Market Operations Shawn McFarlane said in a statement.

RTO Insider reports that MISO is growing its planning reserve margin to more than 17% this summer, up from 15.8% for the 2017/18 planing year. The news outlet also reports relatively low capacity prices are expected to continue indefinitely.

While low capacity prices have caused issues for coal, nuclear and some gas generation in competitive markets, Energy News Network reports MISO remains confident in its planning processes and is not concerned about reliability issues related to retirements.

MISO's planning auction cleared a total of 135,179 MW to meet forecast demand and the region-wide planning reserve margin for the 2018-2019 planning year. That is roughly the same amount cleared in the 2017-2018 planning year.