Since the new Forward Capacity Auction design was implemented three years ago (FCA 8), prices have declined over the past two auctions. Now, with increases to the amount of demand response clearing the market, and several other structural developments, the future of prices and new units entering the market are face serious questions.
What caused these declines, and are the capacity prices expected to decline further? There are several changes for the next auction (FCA 12) most of which are likely to add even more downward pressure on the prices. Nonetheless, ICF believes that the prices are close to the lowest expected levels because further decreases will trigger retirements.
Download the full whitepaper to learn more