Sunrun Inc., a home solar, battery storage and energy services company, won a bid to deliver home solar and batteries as a source of energy capacity through ISO New England’s recently completed forward capacity auction (FCA) procuring capacity for the 2022-2023 delivery year.
Sunrun’s participation in the grid operator’s capacity market is the first time in the U.S. that home solar and battery storage has directly participated alongside centralized power plants in a wholesale capacity market, the company said on Feb. 7.
ISO-NE recently completed the thirteenth FCA, procuring capacity for the 2022-23 delivery year.
Sunrun won its bid to provide 20 megawatts of energy capacity from Sunrun’s Brightbox home solar and battery systems.
First ISO-NE auction under CASPR rules
This was the first auction run under the Competitive Auctions with Sponsored Policy Resources (CASPR) rules, which attempt to accommodate state-sponsored resources by establishing a two-stage auction.
The first auction applies the current minimum offer price rule (MOPR) and is immediately followed by a substitution auction where resources seeking to retire can offer to buy out their capacity supply obligation from new, state-sponsored resources that didn’t clear in the primary auction.
The FCA clearing price was $3.80 per kilowatt-month (other than $2.68 in the New Brunswick zone which accounts for less than one percent of the capacity). Last year’s price was $4.63. The total cost of this auction is about $1.6 billion, which is a lower cost than the past five auctions.
ISO-NE is retaining the Mystic 8 and 9 natural gas units in Massachusetts, deemed to be needed for fuel security, through a cost-of-service agreement. Such units were permitted to bid into the auction at a zero price, which may have contributed to the lower prices.
Capacity procured through the FCA totaled 34,839 MW, representing a surplus of 1,089 MW (3 percent) over the capacity requirement. New generation represented 2.4 percent of the total MW clearing the auction, and new demand response and energy efficiency accounted for 1.9 percent.
The substitution auction cleared just 54 MW of resources (0.2 percent of the total), all of which was a portion of Vineyard Wind, an 800-MW offshore wind facility currently under development that has long-term contracts with Massachusetts investor-owned utilities pursuant to state law. ISO-NE has not yet provided data on the total amount of retiring resources seeking to buy out their obligations or on the substitution auction price.
Vineyard Wind’s participation in the auction generated controversy at the Federal Energy Regulatory Commission because of recently implemented changes to the ISO’s Renewable Technology Resource (RTR) exemption from the MOPR for state-sponsored resources. The RTR will be phased out over the next three auctions due to the implementation of CASPR.
As part of a package of rule changes recently filed and approved by the Commission, the ISO had revised the RTR language to allow offshore wind to be eligible. The prior wording had excluded offshore wind by requiring an RTR resource to be located geographically within a state.
Because the deadline for the RTR exemption had passed prior to the language fix, an offshore wind resource seeking to utilize the RTR exemption for FCA 13 would have needed a waiver from the Commission. The Commission however did not act on the waiver requested by Vineyard Wind, leading Vineyard Wind to file an unsuccessful emergency motion to stay the auction.
Commissioners Cheryl LaFleur and Richard Glick issued a joint statement on Feb. 4 expressing disappointment that the Commission did not act on the waiver request, stating that “the Commission has introduced significant uncertainty into this auction. All parties, including New England’s states, consumers, and auction participants, deserve better.”
Chairman Neil Chatterjee then responded via Twitter stating that he does “not discuss the Commission’s internal deliberations with the public. Doing so would be highly inappropriate and might undermine the Commission’s process.”
The RTR was capped at 481 MW for this auction, but only 145 MW of resources cleared under this exemption, leaving over 300 MW to be carried over to next year’s FCA.
