PROVIDENCE – New England’s annual power supply auction ended this week, with preliminary results showing the lowest clearing price in six years and a power supply surplus for the 2022-2023 season.
Holyoke, Mass.-based ISO New England Inc. is a federally regulated nonprofit that runs the electricity grid for the six New England states.
It holds the auction each year to ensure the region has enough electricity to meet consumer demand in three years. The auction also determines how much power generators will get paid for supplying the grid.
The closely-watched event, in which energy and utility companies bid to supply New England’s grid, can move stock prices and provide a look into the long-term direction of the energy market.
“This year’s auctions procured the resources needed for a reliable power system at a competitive price, while implementing new procedures to accommodate state-sponsored renewable resources,” said Robert Ethier, vice president of market operations for ISO-New England.
“It’s our responsibility to run these auctions and our wholesale markets under the rules approved by the Federal Energy Resources Commission, and we fulfilled that responsibility again this year,” he said.
It was the 13th “forward capacity market” primary auction and closed at a preliminary clearing price of $3.80 per kilowatt month across New England, compared with $4.63 per kilowatt month in last year’s auction.
The primary auction ended with commitments of 34,839 megawatts to be available for the period from June 2022 through May 2023, with 1,089 megawatts of surplus supply, ISO New England said.
It was the first auction run under new rules which include a secondary substitution auction in which power generators interested in retiring a source can trade their capacity supply obligation to new state-sponsored power generators that didn’t clear in the primary auction.
The substitution auction closed with Vineyard Wind, an offshore wind project in development off the coast of southeastern Massachusetts, assuming an obligation of 54 megawatts, ISO New England said.
Vineyard Wind unsuccessfully sought to delay the auction so it would have more time to seek a federal waiver that would have allowed it to participate in the auction as a “renewable technology resource.”
The designation would have exempted the company from the auction’s minimum offer price rule.
Vineyard was one of three companies that bid about $135 million each in December to lease federal waters off the southeastern Massachusetts coast for development of offshore wind energy turbine farms.
ISO New England said offshore wind projects proposed for federal waters will be eligible for the next annual auction in February 2020.
Opponents of a proposed natural gas power plant in Burrillville by Chicago-based Invenergy said the low price and surplus from this week’s auction shows there is no need for the project.
“This low clearing price shows that there is plenty of supply relative to demand – more evidence that Invenergy is not needed,” said Jerry Elmer, senior attorney for the Conservation Law Foundation in Providence.
Invenergy has argued the opposite, saying the New England grid faces a potential 10,000-megawatt shortfall in coming years as old energy sources retire, and so-called renewable energy such as solar and wind won’t be enough to fill the gap.
Rhode Island gets nearly all electricity production from natural gas sources.
“It’s taken decades to build our wind, solar and hydro resources, yet they only meet 15 percent of our needs,” Invenergy said on the project’s website. “Our demand for energy requires a diverse portfolio of renewable sources and natural gas.”
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
