The 448 MW Merrimack station is the largest of the region's three remaining coal plants and has drawn protests from environmentalists in the region determined to rid New England of the fuel. The plant had previously won payments to stay open until mid-2023, according to the Concord Monitor, and will receive another $8.1 million through June 2024 to stay open.
States and stakeholders have become increasingly frustrated with ISO-NE for favoring incumbent generators over new clean resources, and some say the Merrimack plant — which operates at one-tenth of the power it ran on a decade ago — is a sign the capacity auction is not working as it should.
In response to state concerns, the ISO developed a new rule called the Competitive Auctions with Sponsored Policy Resources (CASPR). The rule, approved by federal regulators, was intended to help bring more state-sponsored renewable resources onto the power grid by introducing a substitution auction immediately after its forward capacity auction "to coordinate the entry of new publicly-sponsored resources in the capacity market with the exit of older existing capacity resources willing to permanently leave."
But states with more aggressive clean energy goals have protested CASPR, saying it continues to promote incumbent fossil fuel generators. The substitute auction, which followed the grid operator's forward capacity auction closure earlier this month, did not produce any clean energy replacements for incumbent fossil fuel resources this round and stakeholders noted that Merrimack not being replaced in the substitute auction could indicate a problem.
"This is the second one of these substitution auctions that are supposed to induce old resources like Merrimack to retire and get paid for doing so, and allow a clean energy resources to substitute in and take that capacity obligation," Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School told Utility Dive. The PJM Interconnection also has in place a controversial mechanism intended to curb the influence of state-driven resource incentives.
"But the substitution auction didn't produce anything this round. It didn't clear any resources and I think the fact that this old coal plant that barely operates is still in the market and didn't come out through the substitution auction highlights a deficiency in how the system is operating right now."
The plant was sold by Eversource to Granite Shore Power in 2017 and it's unclear whether the owners tried to bid it into the substitution auction, where it is supposed to be compensated based on the difference between the higher forward capacity auction price and the lower substitute auction clearing price. Granite Shore Power did not get back to Utility Dive by time of publication.
Massachusetts Attorney General Maura Healey in December launched a petition to force the grid operator to promote cleaner power procurement.
In response to Tuesday's auction, Healey tweeted: "Yesterday's ISO-NE auction shows that existing ISO programs are not bringing renewable resources into the market at the pace necessary to fight the climate change," linking to the petition.
All the new resources that cleared the capacity auction were either clean technologies, or demand reducing resources, according to ISO-NE spokesperson Matt Kakley.
"The ISO's markets are open to all types of resources on an equal playing field, and we've seen hundreds of megawatts of wind and solar come through the capacity market. The ISO works every day to ensure the grid and marketplace are ready for the renewable resources that are being developed," he told Utility Dive in an email.
ISO-NE received historically low prices for its 2023 to 2024 capacity market auction, clearing at $2/kW per month, with 33,956 MW of resources that includes 323 MW of new demand resources and 335 MW of new generation.