ISO-NE Capacity Market Redesign — Pay-for-Performance Transitions to Clean Energy
ISO-NE is overhauling its Forward Capacity Market (FCM) to integrate clean energy resources and distributed energy resource (DER) aggregations, moving away from its aging Pay-for-Performance (PFP) framework. FERC approved ISO-NE's compliance filing under Order 2222, enabling DER aggregators to compete directly in capacity auctions for the first time. Capacity prices in the Rest-of-Pool zone have risen to $4.63/kW-month — up 18% year-over-year — as aging gas plants retire and offshore wind projects face interconnection delays.
From Pay-for-Performance to CASPR+
ISO-NE's Pay-for-Performance mechanism, introduced in 2018, financially penalized generators that failed to deliver during scarcity events and rewarded those that over-performed. While it improved winter reliability, critics argued it structurally disadvantaged intermittent renewables and DERs that cannot guarantee firm output.
The new framework — informally termed CASPR+ (Competitive Auctions with Sponsored Policy Resources, enhanced) — creates separate capacity tracks for conventional and clean resources, allowing state-sponsored clean energy contracts to complement rather than clash with competitive capacity clearing prices.
ISO-NE Capacity Price by Zone (2026 Auction)
| Zone | Capacity Price ($/kW-mo) | YoY Change |
|---|---|---|
| NEMA / Boston | $5.14 | +22% |
| Connecticut | $4.98 | +19% |
| Rest-of-Pool (ME/NH/VT/RI) | $4.63 | +18% |
| SEMA / Cape Cod | $5.31 | +25% |
Source: KilowattLogic analysis based on ISO-NE Forward Capacity Auction 20 results and FERC Order 2222 compliance filing.
DER Aggregation: New Opportunity for C&I Demand Response
The most immediately actionable development for commercial energy buyers is the approval of DER aggregation. Businesses in ISO-NE can now aggregate rooftop solar, battery storage, and controllable loads through a qualified aggregator to participate in the capacity market — effectively turning energy flexibility into a revenue stream.
- Minimum size: 100 kW aggregated across multiple sites within a single electrical zone.
- Revenue potential: At current capacity prices, a 500 kW aggregation earns approximately $2,750/month in capacity payments.
- Metering requirement: FERC-compliant interval metering required; ISO-NE filed revised metering standards in January 2026.
Explore Demand Response in New England
Rising capacity prices mean greater revenue potential for flexible commercial loads. Find out if your New England facility qualifies for DER aggregation.