What new reforms to capacity accreditation mean for US power markets

For grid operators, capacity accreditation is a vital tool in ensuring the availability of power when it is most needed. But as markets decarbonise and extreme weather events increase, urgent reform is needed to ensure accreditation more accurately reflects the reliability value of resources.  

The latest report from our North America Power Service team explains the key challenges for accreditation in major US power markets and assesses the expected impact of planned reforms.  

Fill out the form at the top of the page to download an extract from the report, and read on for a quick summary of five of the report’s points: 

1. Legacy accreditation methods are no longer fit for purpose 

Historically, regional transmission organizations (RTOs) and independent system operators (ISOs) each developed their own methodologies to calculate capacity accreditation. However, what all these approaches had in common is that they were developed for a more static grid dominated by thermal resources. That makes them poorly adapted to the realities of today’s power markets, particularly in terms of the rapid deployment of intermittent renewables and the increasing frequency of extreme weather events. 

2. Accreditation needs to address changes in patterns of reliability risk 

Legacy accreditation systems tend to assign values to resources based on performance during key summer hours when demand was traditionally at its peak. But RTOs can no longer assume reliability risk is concentrated in the summer months; due to electrification and growth in the deployment of solar resources, for most markets net peak demand is either already in the Winter or will be in the next ten years or so. 

3. Extreme weather events present a growing challenge to grid reliability 

Grid operators struggle to predict when extreme weather such as heatwaves or winter storms will occur – and how severe they will be. At the same time, current accreditation approaches that focus on maximum tested output or generation in a fixed window of hours fail to take extreme weather into account. As well as investing in existing and new capacity to make networks more robust, RTOs need to update capacity accreditation to accurately measure performance at times of highest reliability risk.  

4. Grid operators are shifting to marginal accreditation approaches 

Accreditation for thermal resources has traditionally used the tested maximum output of a generator, or the installed capacity after taking account of forced outage rates. However, these measures don’t consider a resource’s ability to perform in reliability events. New frameworks tend to use marginal effective load carrying capacity (ELCC), a measure of the incremental benefit to reliability provided by new capacity for a particular resource class. Introduced for renewables, ELCC is increasingly being used by grid operators across all resource groups. 

5. The direction of further reform points to seasonal accreditation 

RTOs are showing a growing interest in seasonal accreditation to reflect changes in the performance of different resource types over the course of an average year. For example, under seasonal models, solar accreditation plummets in the winter due to shorter days and the much lower intensity of sunlight. Although they are comparatively more reliable than solar in this season, accreditation values for thermal resources are also lower in the winter, as  they also face the risk of non-performance (as demonstrated in storms Uri and Elliot). Conversely, wind tends to be more prevalent in winter months, giving it a higher accreditation for that season.  

Learn more 

Don’t forget to fill out the form at the top of the page to download the full report, which features four more important points, covers all the issues explored above in greater detail and includes a full range of charts and supporting data. 

Plus, click here to learn more about our North America Power Service, which helps you capture the changes that technology, regulation, growth and underlying fuel prices are having on electricity pricing and demand. 

Discover Lens Power

And before you go, watch our quick video below on how Lens Power can help you assess nodal basis risk in US markets. You can see real time nodal pricing for every node, zone, hub in the United States with Lens, but in this three minute video we focus in on ERCOT to show how you can monitor price volatility in Lens Power: