As part of its January 7, 2025, Installed Capacity Working Group meeting materials, the New York Independent System Operator (NYISO) released informational Capacity Accreditation Factors (CAFs), updating the informational values initially posted in October 2024. See below for what this means and why it is important for suppliers currently serving or planning to interconnect to the bulk power system in New York State.
A key responsibility of the NYISO is to determine how much capacity different resources can bid into its capacity auctions. With intermittent renewables and storage resources with a limited duration interconnecting to the bulk system, the reliability of these assets to provide energy during high-demand periods must be properly valued. If properly valued, the NYISO’s capacity market can then incentivize the development of resources that can be relied on to reduce the risk of customers losing power because of a lack of electricity serving the bulk power system. With this valuation, the NYISO can also plan for how much capacity needs to be available to serve forecasted customer load by utilizing time and location-based risk profiles. As compared to traditional generation, the NYISO must plan not only based on a resource’s historic performance during peak periods but also for a resource’s ability to produce energy because of the availability of wind and sunshine.
To measure the ability of resources to contribute to maintaining resource adequacy, the NYISO uses a Marginal Reliability Improvement (MRI) methodology to determine the CAFs that are presented below.1 These values are based on the type of resource and region (divided by NYISO zone) and directly discount the amount of capacity these resources can bid into NYISO’s capacity auctions.2 For resources intending to participate in the NYISO’s Installed Capacity auctions, the capacity they are qualified to bid in is, as an initial step, discounted by the percentage in the table below. Thus, a 100 MW solar facility in New York City would be able to bid in at most 12.03 MW of capacity.
NYISO’s final CAFs will be posted by March 1 for the Capability Year starting May 1, 2025, and are updated annually. It is critical for suppliers participating in the NYISO’s capacity auctions to understand how these CAFs impact potential capacity revenue, and more broadly, how these CAFs are calculated to ensure resource adequacy.
Barclay Damon’s Regulatory Practice Area attorneys will continue to monitor the NYISO’s capacity market and provide updates once the CAFs are finalized.
If you have any questions regarding the content of this alert, please contact George Pond, partner, at gpond@barclaydamon.com; Ben Falber, partner, at bfalber@barclaydamon.com; or another member of the firm’s Regulatory Practice Area.
1The NYISO’s marginal capacity accreditation design was approved for implementation by the Federal Energy Regulatory Commission, Order Accepting Tariff Revisions Subject to Condition, Docket No. ER22-772-001 (May 10, 2022).
2The NYC Locality refers to Zone J, and the Long Island Locality refers to Zone K.
3As indicated by the NYISO, the CARCs with an asterisk are new to the 2025–2026 Capability Year and are reflected in the 2025-2026 Final CARC List.