New York Grid Operator Proposes Capacity Market Changes to Meet Decarbonization Mandates

The New York Independent System Operator submitted market rule changes for consideration by the Federal Energy Regulatory Commission (FERC) proposing to revise buyer-side mitigation, or BSM, rules, in a bid to advance the objectives of the state’s landmark climate law, according to a Jan. 10 press release. The changes would exempt clean energy resources from contentious BSM rules, and are expected to stimulate the investment required to meet the state’s decarbonization and renewable investment goals.

The 2019 Climate Leadership and Community Protection Act requires that New York reach 70 percent renewable electricity by 2030, zero-emissions electricity by 2040, and net-zero greenhouse gas emissions economy-wide by 2050. If approved, the revised BSM rules would expand wholesale electricity market access  to significant investment in wind, solar and battery storage development.

The market rule changes are also projected to accelerate renewable energy development, attract new technologies needed for a cleaner and more efficient grid and serve the state’s customers reliably. The revisions would enhance the currently effective buyer-side capacity market power mitigation rules. The grid operator, in its Jan. 5 filing with FERC, noted that the proposal would resolve “years of tension between the commission’s obligation to protect the NYISO-administered capacity market from buyer-side capacity market power and New York State’s authority to address New York’s resource mix.”

The proposal, if implemented, according to analysis by the grid operator’s stakeholders, government partners and market participants, could help consumers save up to $500 million annually.  The operator believes that the new rules are important in ensuring investment and support in new technologies supplying the grid and have requested that the proposed rules become effective on Mar. 6, 2022.