Market Intel

ISO-NE

Market Overview

ISO-NE oversees the operation of New England’s power grid, ensuring reliability, administering wholesale electricity markets, and planning for the future needs of the grid. The region includes six states: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.

To-date, batteries have played a marginal role, with only ~90MW of short-duration energy storage available. Utility-scale solar and wind generation are also fairly limited, representing only ~4% of the fuel mix. However, state-level clean energy targets, storage procurement targets, and increasing electricity demand imply that growth is on the horizon.
  • 56%

    Fuel mix expected to be from renewable electricity production by 2040
  • 10GW+

    Brown generation retired or expected to be retired in the near-term
  • 0.4GW

    Energy storage capacity as of late 2024

ISO-NE has demand and state-level price support mechanisms that should contribute to a compelling case for storage developers and operators.

State-Level Breakdowns

Targets and price support mechanisms by state vary.

    • Storage procurement target:
      1GW by 2025
    • Incentive/Procurement mechanisms:
      CPS, SMART
    • Renewable target:
      80% by 2050
    • Storage procurement target:
      • 650 MW by 2027
      • 1 GW by 2030
    • Incentive/Procurement mechanisms:
      DEEP (RFP)
    • Renewable target:
      100% by 2040
    • Storage procurement target:
      • 300MW by 2025
      • 400MW by 2030
    • Renewable target:
      100% by 2050
    • Storage procurement target:
      • 90MW by 2026
      • 195 by 2028
      • 600MW by 2033
    • Renewable target:
      100% by 2033
  • Renewable target:
    25.2% by 2025

  • Renewable target:
    90% by 2050

Market products

Energy storage is able to participate in Energy, Ancillary Services, and Capacity markets. 

  • Energy

    Currently there are somewhat limited arbitrage opportunities due to minimal price variance between Day-Ahead and Real-Time average hub prices.

  • Ancillary Service (AS)

    Notably, there is no Day-Ahead AS market in ISO-NE, but it is in the 2025 budget, so we may see changing in the coming year.

  • Day-Ahead (DA)

    Offering energy to the grid at a set price, locked in a day in advance.

    Energy

  • Real-Time (RT)

    Choosing to place a bid using consistently updating forecasts to capitalize on market volatility and price spikes associated with unexpected demand.

    Energy

  • Regulation

    A promise to increase or decrease output or consumption, in response to signals from the ISO by the ISO, every four seconds.

    Ancillary Services

  • Forward Reserves Marker (FRM)

    Compensates resources for keeping positive and negative capacity in reserve and available to provide electric energy within 10 to 30 minutes.

    Ancillary Services

  • Real-Time Reserves

    Compensates resources for operating in a ready-to-respond state to supply electric energy or reduce demand in real time.

    Ancillary Services

Forward Capacity Market

Ensures the ISO will have sufficient resources to meet future demand. 

  • Sold in annual auction, 3 years in advance of the period for which capacity will be supplied (e.g., Feb 2024 auction for 2027/2028 year)
    How to qualify >>
  • This past cycle, 6% of procured capacity came from energy storage, to be available in 2027/2028
  • Capacity prices will be rising to ~2.60-2.70/kW-month until 2027/28, then again to $3.58

ISO-NE is considering transitioning to a “prompt seasonal capacity market,” which would allow the ISO to better align with seasonal needs (ie. we may see higher capacity needs and prices in winter months). This would also mean new storage assets have the opportunity to participate sooner!

Market Opportunities

With robust renewable energy targets and long winters, ISO-NE is going to need sufficient storage capacity to support reliability. A few factors are at play here.

  • Electrification of transportation and heating is driving substantial increases in electricity demand, creating a critical need for flexible resources like storage to manage surges and peak loads.

  • As ISO-NE shifts to a winter-peaking grid, energy storage can capture revenue opportunities during seasonal demand surges, balancing summer and winter peaks for year-round profitability.

  • With increasing reliance on intermittent solar and wind as the transition to clean energy progresses, storage will play a vital role in ensuring grid stability during prolonged periods of low renewable output.

  • Market changes like Pay-for-Performance (PFP) reward storage operators for rapid and reliable responses during capacity shortages, offering valuable revenue adders.

  • State-level programs like Clean Peak Standard (CPS) and federal incentives like the Investment Tax Credit (ITC) are significantly improving the economics of deploying energy storage in ISO-NE.

“Over the next 20 years, we expect that renewable resources will displace natural gas as the main source of electricity generation in the region.”

 2024 ISO-NE Regional Electricity Outlook

State-level price support mechanisms

  • Massachusetts DOER Clean Peak Standard

    Green tick icon

    This program provides incentives to energy storage systems that deliver electricity during peak demand periods, helping reduce reliance on fossil fuels during critical times.

  • Massachusetts SMART Program

    Green tick icon

    The Solar Massachusetts Renewable Target (SMART) program offers additional financial incentives for pairing solar installations with energy storage, encouraging integrated renewable and storage projects.

  • Connecticut DEEP Energy Storage RFP

    Green tick icon

    Connecticut’s Department of Energy and Environmental Protection (DEEP) issues Requests for Proposals (RFPs) to procure energy storage projects, supporting the state’s clean energy goals and grid reliability.

Deep Dive

Maximizing project value under CPS

During the project evaluation and development phase, it is critical to account for CPS operating constraints and CPEC awards in your modeling. This will provide an accurate picture of energy output, and potential project returns, so you can design the most advantageous scenario.

Once assets go live, accurate price and peak load forecasts along with optimization software that enable operators to discharge into peak hours will be even more important.

Learn more
  • Layer CPEC into Dispatch Model

    CPEC awards will be calculated by taking the total MWh delivered in seasonal peaks, and actual monthly peaks, and adjusting for a variety of multipliers.

  • Visualize Energy Output

    Understand when the asset will dispatch, into what instruments, and at what price points (factoring in applicable multipliers).

  • Simulate Revenue

    Deeply understand how much revenue your project stands to generate, and where that revenue is coming from (ie. CPS vs. Real-Time Energy vs. Reserves).

Maximizing both the incentives and the wholesale opportunity

Maximizing both the incentives and the wholesale opportunity

  • Develop a lucrative project

    Model revenue from wholesale market participation and incentive programs, using realistic operating strategies. Compare locations, asset sizes, and participation approaches to hone in on your optimal project. 

  • Apply for a state incentive program

    Configure a winning bid for one of the state incentive programs available. These programs can reduce project risk.

  • Prepare for go-live

    Conduct rigorous system testing, and develop default bidding strategies that account for both incentives and wholesale revenue streams.

  • Live operations

    Maximizing revenue in live operations requires bespoke daily forecasts and optimization strategies. These should account for locational price adders, program restrictions, and wholesale market dynamics. Continuous real-time adjustments ensure assets capitalize on price volatility while maintaining compliance with program rules.