Then, in June 2013 you would submit a
more complete qualification package to the
ISO-NE. This package will include a detailed
description of what you intend to do — or
have already done. You will need to indicate the location of the projects (generally by
state) and indicate how you intend to meter
the output of the panels, verify this data and
report it monthly. You will also need to submit financial information, indicating the total
costs (both yours and your customer’s) and
savings from installing the portfolio of projects
(the amount of electricity the customer didn’t
have to buy from the grid).
In February 2014, you actually participate
in the auction. This particular type is called a
descending clock auction. It is held in rounds,
starting with a very high price and working
downward. In each round, as the price decreases, you have the option to decide the price is too
low and drop out. If you stay in the auction until
it closes, you’ve cleared, you have an obligation
to deliver the amount of capacity you promised
for June 2017, and you have a promise to be
paid for it at the auction clearing price.
SCHOTT SOLAR Pv INC.
The trick in New England is that the capacity auction is held three years in advance of the delivery period, and therefore the qualification process starts a full four years in advance. The Brockton Brightfield, a 425-kilowatt PV system in Brockton, Mass., is a participant in the region’s Forward Capacity Market.
of your projects. The FCM, for instance, is
an annual auction. When you qualify, you
will estimate the output of your projects during both summer and winter seasons, with
summer output generally being measured on
The bottom line: Your customer’s solar panels are every bit as effective
in providing (or offsetting) power as a large central station power plant.
Therefore, you and your customers should get paid for it.
In each quarter after the auction, you will
submit a status report to the ISO-NE, indicating the progress you are making toward
building the capacity you cleared in the auction, up until all of your projects are installed
and operational. Thereafter you will submit
monthly meter data to the ISO-NE indicating
the output of your customers’ PV systems.
Of course there are numerous other details
involved in participating in a wholesale capacity market. In the ISO-NE FCM, you must join
and be a member of the New England Power
Pool to participate in the markets, at a cost of
just a few thousand dollars per year for a small
player. You must post collateral for any projects
that clear in the auction but are not yet operational. Annual and monthly reconfiguration
auctions allow you to true up your obligation
with the amount you can deliver.
Perhaps the most important consideration
for solar developers is the summer-only nature
Are Capacity Markets for Me?
If the details sound daunting, you have the
option of finding an aggregator that is already
a participant in your region’s capacity market.
There are many participants that have already
weekday afternoons, and winter output being
measured during the early evening hours.
These are the times of highest seasonal loads,
and, therefore, they are when the ISO-NE
measures your capacity. If you also have distributed-generation projects that reduce grid
usage during winter evenings, like cogenera-tion systems, you can pair them with your PV
projects to balance your winter and summer
capacity. If not, then you’ll be forced to find
a partner to balance seasonal capacity. Many
such partners are available, as most steam
generators have extra capacity available in the
winter, but it does take time and effort to make
built some of their own distributed-generation
projects, but not as many as they thought they
could. These folks would gladly sign up a few
more projects and share some of the revenue
from the auctions. As in any other situation,
doing it yourself lets you keep all of the revenue, but signing up with an existing participant saves you some aggravation. In this case,
the aggregator would receive the payments
directly from the ISO-NE and share some
of that revenue with you each month. Each
month you would report the output from your
customers’ systems to that company, and they
would include it with their other projects in
reporting to the ISO-NE (or whatever organization is the market operator in your area).
The other advantage these aggregators have
is timing. As the historical price chart on page
32 illustrates, prices in the ISO-NE FCM have
been falling. One of the other quirky details
of the two forward capacity markets in New
England and PJM is that when you enter the
market with a new set of projects, you can opt
to be paid that first-year price every year for up
to five years (four years in PJM). In a downward pricing trend, those who got in early have
a price advantage.
The specifics of participating will differ
depending on the capacity market, but as
demonstrated by the ISO-NE FCM example,
it involves a great deal of coordination —
especially if you do it alone. For the motivated developer who can catch an upswing
in the markets, however, the rewards can be