​New York City's capacity prices are spiking this summer. The monthly spot auction cleared at $32.6/kW-month in May and $32.5/kW-month in June. That is a record, 67% above the zone's previous high and more than double May and June prices from 2025.

The largest driver is generation scarcity in a transmission constrained zone alongside higher summer reliability requirements for NYC. At the May 1 summer reset, New York City's surplus capacity fell by 1 GW, from 1,050 MW to single digits. Two-thirds of the price rise came from this squeeze while a higher demand curve drove the rest.

Key takeaways

• New York City capacity prices cleared $32.6/kW-month in May 2026, a record 67% above its previous high. Summer 2026 clearing prices are more than double summer 2025.
• The city's available generation fell about 617 MW into the summer, more than the 435 MW rise in its requirement. Together they erased a 1 GW surplus in bidded capacity.
• For batteries, the spike is worth $25,600/MW-month, or $5 million across May and June for a 100 MW, four-hour system.
• Long Island and the rest of the state also set records, but stayed 3x lower at $8 to $12/kW-month (Long Island up 11%, rest of state up 29%).

New York has historically cleared above the rest of the state

New York City sits behind a transmission constraint. A minimum share of its peak load must be met by in-city generationand cannot fully lean on cheaper upstate power. Therefore, a price premium exists: New York City has cleared more than 250% above rest-of-state levels since 2023.

In addition, capacity prices for all regions climb every summer when the system tightens. Summer 2026 went further than any before it, a record 67% above the prior high.

Long Island rose 11% above its own record, and the rest-of-state price 29%.

What this means for batteries

A battery receives capacity payments after accounting for accreditation factors on the clearing price. In NYC, a four-hour has a 78.5% accreditation factor and collects $25,600/MW-month this summer.

For a 100 MW system, that is $5 million in capacity payments across May and June alone.

The payment is double summer 2025 and more than five times the winter 2025-26 level. Long Island and the rest of the state earn far less, because their surplus held. Payments also scale with duration: a longer-duration battery accredits higher and earns more per MW.

How New York City's capacity price rose to $33/kW-month

The move from $6 to $33/kW-month breaks into three steps. Scarcity added the majority: with the surplus gone, the auction cleared at the reference point of 100% capacity. A higher seasonal curve and a change of reference unit to a 2-hr BESS added the rest.

​The Champlain Hudson Power Express, a 1,250 MW transmission line, energized on May 13 but missed the auction notice deadline. Therefore, the line could not count as local NYC capacity..

What is driving the spike this summer?

Three things tightened the market at once. The requirement rose, eligible supply was reduced, and the Champlain Hudson Power Express was ineligible for May and June auctions.

The May 1 reset lifted New York City's unforced capacity requirement by 435 MW, from 8,051 MW to 8,486 MW. Meanwhile, Zone J’s Locational Capacity Requirement (LCR) stepped from 78.5% to 82.6%. Forecast peak load barely moved (+0.5%) confirming that this was a requirement step-up, not a demand surge.

Alongside requirement changes, NYC’s supply decreased compared to winter 2025. In summer heat, thermal plants derate: their dependable ratings drop, so they accredit less capacity. New York City's awarded capacity fell 617 MW between the periods, from 9,108 MW to 8,491 MW.

All three forces pushed the same way: the 617 MW supply drop and the 435 MW requirement rise added up to the roughly 1,050 MW surplus that disappeared with no replacements.

The capacity demand curve for NYISO also reset higher

Two forces lifted the demand curve at the summer reset. First, the reference unit switched from a natural gas plant to a two-hour battery. Its lower ICAP-UCAP translation factor, 56% against 65%, raises the reference price. Second, the curve itself escalated due to a change in the Net Cost of New Entry of the reference unit and the shift to summer locality requirements.

NYISO resets the curve each capability period. This summer, the NYC ICAP reference point rose from $14.6 to $17.8/kW-month. Together with the lower accreditation factor, that lifted the UCAP reference point, the price at 100% of requirement. It climbed 41%, from $23.1/kW-month in winter to $32.7/kW-month in summer.

In winter, the city cleared down its curve, with about 1,050 MW of surplus and a price near $6/kW-month. In summer, it cleared at the reference point, with no surplus, at $32.6/kW-month.

Outlook for NYISO’s 2026 capacity markets

The July auction will correct prices downwards. Champlain Hudson becomes eligible then, adding 1,250 MW inside the city, which is poised to ease prices for the rest of the summer.

But the line does not reverse the underlying trend. Thermal plants will continue to retire, the remaining fleet keeps aging, and New York City’s electricity demand is growing. New York City is now one summer outage away from another spike.

If a major resource cannot offer in or CHPE itself goes down, the surplus disappears again. Utility-scale in Zone J, eligible for the capacity market unlike BTM BESS, could then profit from outsized payments.