PJM, CAISO and MISO have all experienced significant spikes in capacity market prices. The last auction in PJM cleared at $269.92/MW-day, increasing ~834% from $28.92/MW-day. In CAISO the resource adequacy price saw a similar increase, jumping from $160.60/MW-day in 2020 to $297.21/MW-day. Most recently, MISO announced its summer capacity price will surge from $30/MW-day to $666.50/MW-day, a striking 22x increase. Key drivers behind these price increases are the retirement of old generation assets, market redesigns and rapid load growth outpacing new generation buildout.
Prolonged interconnection queue wait times are one factor affecting capacity payments. As shown in Figure 1, PJM, MISO and CAISO rank among the highest in average queue duration, contributing to upward pressure on prices. To address this, ISOs must streamline and accelerate the interconnection process to align new generation installs with demand growth. This not only aids in stabilizing or reducing capacity market prices but, more importantly, supports the stability of the power grid.
Enverus Intelligence® Research’s (EIR) interconnection queue analytics data in PRISM shows that in ERCOT, CAISO and MISO, suspensions are concentrated earlier in the project lifecycle, leading to a linear increase in completion probability as projects near construction. In contrast, NYISO, SPP, PJM and ISONE have higher suspension rates later in the project lifecycle, with Interconnection Agreement suspension rates ranging from 46%-79%, compared to around 20% in ERCOT, CAISO and MISO. Projects in these markets show minimal improvement in completion probability until reaching construction.
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