Market Intel

NYISO

NYISO

Market Overview

NYISO manages a wholesale power market, serving close to 20M people in the state of New York. The ISO is charged with balancing the available supply of power, every six seconds, from hundreds of power plants over thousands of miles of transmission lines. 

NYISO was the first ISO to allow full participation of Energy Storage Resources (ESRs), and currently has ambitious decarbonization targets – and incentives in place to help meet them.
  • 100%

    Renewable energy by 2040
  • ~0.2GW

    BESS capacity online as of late 2024
  • 6GW

    Energy storage target by 2030

NYISO has both compelling incentive programs and ambitious renewable energy targets. As the grid transitions to more renewable generation sources – storage will be critical to maintain reliability, and benefit from the increased volatility that can come with intermittent generation assets (ie. solar and wind).

Market Structure

NYISO manages the wholesale electricity market – coordinating energy, capacity, and ancillary services across multiple stakeholders to deliver energy to New Yorkers across regions.

Key Players

  • Maintains reliability and manages the market to balance energy demand with supply.

  • Intermediary between electricity generators and NYISO; submits bids on behalf of generators and handle financial settlements.

  • Own and operate power generation and storage assets bid/sell to the grid.

  • Load Serving Entities purchase power from wholesale market to serve end customers.

  • Your market navigator; a platform leveraging real-time data and predictive insights to help maximize revenue, ensure optimal performance and grid stability.

Market products

ESRs can participate in energy, capacity and ancillary service markets. NYISO simultaneously optimizes across all markets to find the most efficient way to maintain reliability.

  • Energy Products

    Bidding into energy products can see high returns from energy arbitrage, and provides flexibility to lock in returns, or capture sudden price spikes.

  • Ancillary Service (AS)

    This almost acts as offering insurance to the grid. You will get a payment for holding capacity, or offering to scale down generation, in moments where there is a mismatch between supply and demand. Bidding into AS can yield consistent returns, and can deliver outsized revenue during scarcity events.

  • 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 (symmetric)

    Balances short-term grid fluctuations by absorbing and discharging energy to balance grid frequency. ESRs must respond to signals within 4 seconds.

    Ancillary Services

  • Operating Reserves

    Provides backup capacity, including spinning (synchronized to the grid) and non-spinning reserves (available offline but quickly activated), to address unexpected demand or generation outages. Participants must meet minimum response times, typically within 10 minutes for spinning and 30 minutes for non-spinning reserves.

    Ancillary Services

Installed Capacity Market (ICAP)

NYISO runs seasonal capacity auctions twice per year to secure the necessary resources to reliably meet expected maximum energy needs plus an Installed Reserve Margin (IRM). There is also a monthly spot auction to help fill any gaps that emerge from unexpected demand or outages.

In 2025, NYISO is reassessing shortage pricing mechanisms, keeping the shifting energy mix and need for reliability top of mind. This could result in a redesign of Ancillary Service pricing, possibly creating more achievable value for storage assets able to optimize against new structure.

Storage Opportunities

Historically, market revenues have not been high enough to justify storage investments. However, compelling incentive programs that mitigate risk and offer higher revenue opportunities are making storage a compelling proposition. Energy storage assets will only be able to see strong ROI if they are able to maximize both incentive program revenue, and wholesale market revenues.

  • Energy demand in NYISO is projected to rise 50-90% over the next 20 years, driven by electrification of heating and transportation.

  • Over 800MW of peaker capacity was recently retired and the majority of assets coming online are wind and solar generation, and therefore have intermittency concerns. This will lead to an inevitable increase in volatility, and create a reliability gap that storage is well poised to fill.

  • Capacity prices increased ~400% for the 2023/2024 capability year in NYC. 

  • NY is offering compelling incentive programs (ISC, VDER), plus the 30% federal  Investment Tax Credit help ensure storage assets generate compelling profits.

  • Storage assets near bottleneck areas like NYC and Long Island are positioned for high revenue opportunities due to their ability to alleviate grid congestion.

Incentive Programs

New York has numerous programs in place that help storage owners de-risk energy storage projects by supplementing revenue streams.

However, these programs also come with complex and nuanced restrictions, making both the modeling and operating difficult without the right tools. 

Other retail-oriented programs such as Retail Storage Incentives or storage adders within NY-Sun

Maximizing both the incentives and the wholesale opportunity

To make the investment lucrative – energy companies will need a combination of smart development / design – and a flexible operations platform able to optimize across all available revenue streams.

  • 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.

Deep Dive

Developing a winning VDER bid

In five simple steps, you can model a variety of potential standalone and co-located projects in New York and get a realistic depiction of revenue potential.

  • [1] Gather utility / territory specific rate information

    Utilities publish these rates on their websites (ConEd example), and NY DPS also has a historical value stack credit data sheet they publish with complied rates across utilities.

  • [2] Construct your price model

    Next, we need to construct our custom VDER price model for the project to feed into the battery optimization engine. For a standalone storage project, we optimize battery dispatch around the DA LBMP and DRV price signal, and model ICAP alt 3 and LSRV.

    1. Pull DA LBMP: simply search by node name
    2. Stack DRV components: in Tyba, this looks like a price adder for specific hours
    3. Upload variable POI limit if the utility has constraints on when the asset can charge/discharge
  • [3] Apply inputs to your design

    Now that we’ve constructed all of our inputs, let’s go ahead and create a new project. Tyba makes creating a new project easy—just input the desired project name, location / node name, start year, project duration, and basic project configuration. Tyba will auto detect the ISO, node, pricing region based upon your location and/or node name.

  • [4] Clone & Compare

    Clone your design, update as many (or few) parameters as you would like to understand how different project designs, operating constraints, or locations impact project revenue.

  • [5] Review results

    Dive into operating strategy for each project, and related revenue outcomes.