Solar Drives Down Price for ISO-NE Power
Silicon Valley-based SunPower on March 16 said it has secured grid capacity for about 11 MW of power after a winning bid in ISO New England’s 14th Forward Capacity Auction (FCA), in which companies predict the cost of making power in 2023. The auction, which closed in February, saw a record low price of $2 per kilowatt-month, about half the price of the $3.80 figure in last year’s auction, which set prices for 2022.
Prices have dropped significantly over the past few years; the auction brought a price of $5.30 in 2017 for production in 2020. The FCA is designed to ensure that enough power plants, along with what are called “non-wires alternatives,” will be available three years from now to maintain the flow of electricity, even at times of peak demand on the grid. The 14th FCA brought commitments for 33,956 MW of power in the 2023-2024 period, or 1,466 MW more than the estimated maximum needed.
“New England’s competitive wholesale electricity markets are producing record low prices, delivering unmistakable economic benefits for consumers in the six-state region,” said Robert Ethier, vice president for system planning at ISO New England (ISO-NE), in a statement after the auction concluded. ISO-NE is the regional transmission organization (RTO) for Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.
The ISO-NE auction at present accommodates resources that may be state-subsidized, such as renewable energy, with an exemption to what’s known as the “minimum offer price rule (MOPR).” That exemption, referred to as a renewable technology resource (RTR), will be phased out beginning with FCA 15 in 2021.
The Federal Energy Regulatory Commission (FERC) recently ordered PJM Interconnection, another RTO, to overhaul its capacity market by applying an MOPR to a variety of state-subsidized resources. The effective result of the change would be to force administratively set minimum prices on future wind and solar resources, energy efficiency, demand response, and nuclear power plants in PJM’s capacity market.
Market analysts for the most part agree such a move would effectively bar clean energy resources such as solar and wind from successfully bidding into PJM’s capacity market, which would benefit coal- and natural gas-fired power plants. They also say it would increase capacity costs for the 65 million people served by PJM’s system, perhaps by millions or even billions of dollars per year, based on different estimates.
The Sierra Club and the Natural Resources Defense Council on Monday published a report saying customers in PJM are paying as much as $4.4 billion a year for unneeded energy, because the grid operator for more than a decade has overestimated how much power it needs to serve its region, which includes 13 states and the District of Columbia.
Virtual Power Plant
SunPower, headquartered in San Jose, California, aggregated its residential portfolio of solar energy as a virtual power plant in order to participate in the auction. The company on Monday announced its winning bid, saying it would deliver close to 11 MW of solar-plus-storage power in New England in 2023 and 2024. ISO New England said SunPower secured capacity at the lowest price in the auction’s history.
SunPower’s capacity commitment comes a year after Sunrun, a San Francisco, California-based residential solar company, successfully bid to provide 20 MW of capacity to the ISO New England grid for 2022-2023, using solar-plus-storage installations.
The annual capacity auction covers the power capacity needed to meet peak power demands on the grid across the six states in ISO-NE’s territory. SunPower will sell capacity at a price of about $2 per kW-month, which correlates to about $190 per installation. SunPower said it will work with local solar dealers in New England to sell and install nearly 1,400 home solar projects to fulfill its capacity obligations.
“SunPower has a large and growing residential customer base, and we look forward to leading the transformation toward a flexible, local, and renewable grid by offering solar and storage services to key organizations like ISO New England and its constituents,” said Tom Werner, SunPower CEO and chairman of the board, in a statement. “This is a historic moment for SunPower and a big win for ISO New England. In the U.S., distributed solar technology is now producing reliable electricity at costs competitive to traditional energy sources like coal and gas which is a major shift from just a few years ago.”
Werner is a former executive at General Electric. The company in a news release Monday said its capacity “joins hundreds of MW of clean energy technology to deliver electricity in the region between years 2023 and 2024.”
Partnership with CPower
SunPower partnered with CPower Energy Management, a demand-side energy management company based in Baltimore, Maryland, on the bid, drawing on CPower’s experience participating in capacity markets, and SunPower’s expertise in aggregating residential solar electric systems.
“CPower is proud to partner with SunPower to generate value for their customers through leveraging the inherent supply of SunPower’s residential solutions to support the stability of the grid,” said Joseph Gatto, CPower Vice President and General Manager of New England.
Said Werner: “We look forward to exploring future virtual power plant opportunities with our complete Equinox home solar-plus-storage system, as SunPower expands energy services in the North American residential market.”
ISO-NE said more than 600 MW of new resources within New England secured capacity obligations during the auction, including about 317 MW that “received their obligations under the renewable technology resource (RTR) designation.” Resources receiving an obligation under the exemption included land-based and offshore wind, solar photovoltaic (PV) systems, and solar PV systems paired with batteries. The ISO-NE said about 19 MW will remain under the exemption for next year’s capacity auction, which will be the last to include the RTR exemption.
—Darrell Proctor is associate editor for POWER.