SPP’s Resource Adequacy (RA) program is designed to ensure the power system has enough supply to meet future demand. SPP accomplishes this by requiring utilities to show they have the capacity to meet peak demand for the upcoming year.
In the summer of 2025, 58 GW (85%) of this capacity came from utilities’ own generators, while the remaining 9.8 GW (15%) was procured from Independent Power Producers.
For private generators, RA contracts provide steady, derisked capacity payments that form the foundation for future revenues. It enables access to cheaper financing, making it easier for developers to secure capital to begin construction.
Continue reading this guide on SPP’s Resource Adequacy market to learn who the biggest customers are, how much you can expect to earn, and what you need to do to secure a contract.
To see how Resource Adequacy works in other ISOs, read our guide on California’s Resource Adequacy market.
Key takeaways
- SPP does not run a centralized capacity market auction. Generators bid for contracts with any of the market’s 64 utility companies.
- Batteries are accredited to sell 24-100% of their nameplate capacity, with higher proportions for 6+ hour batteries in the Summer Resource Adequacy season.
- Historically RA contracts have paid $2-3/kW-month, but this is expected to rise as deficiency penalties increase and Reserve Margins tighten.
Got any questions on Resource Adequacy contracts in SPP?
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1. Who do generators sell their capacity to?
SPP has no centralized capacity market auction. Generators contract directly with any of the 64 utilities and energy suppliers, known as Load Responsible Entities (LREs).
These LREs fall into four groups:
- Investor-owned utilities: Large, for-profit utilities. They own most generation and transmission in SPP - and buy the most RA capacity.
- Cooperative utilities: Non-profit utilities primarily serving rural areas.
- Municipal utilities: Public utilities serving residents within a city.
- Public Power Agencies: Government-owned utilities that provide services at the city or regional level.
Investor-Owned Utilities serve 58% of the load in SPP, and buy 49% of the capacity procured in the bilateral Resource Adequacy market.
But despite procuring the most capacity, Investor-Owned Utilities account for only five of the top ten buyers in the market. Utilities with lower load requirements tend to own less generation, and buy a larger proportion of their RA requirement from private generators.
Western Farmers Energy Services, for example, purchased 42% (960 MW) of its RA requirement from Independent Power Producers, making it one of the top five customers for capacity in 2025.
2. How much capacity can a battery sell?
Generators can only sell up to their accredited nameplate capacity for Resource Adequacy.
For batteries, the proportion of their nameplate capacity that is accredited is based on two criteria:
- Four-hour minimum: Each battery must be capable of supplying its power for at least four continuous hours. Shorter-duration systems are derated to a four-hour equivalent (e.g., two-hour → 50% of nameplate).
- ELCC accreditation factor: rated power are then adjusted by an accreditation factor set in SPP’s annual Effective Load-Carrying Capability (ELCC) study. Factors vary by duration and season.
Multiplying a battery’s four-hour-adjusted nameplate rated power with their duration’s ELCC factor for the season gives the accredited capacity they are allowed to sell.
In 2026, the only batteries qualified to provide 100% of their nameplate capacity were eight-hour resources in the summer.
Why are battery capacity accreditations lower in the Winter?
A battery’s ELCC accreditation factor depends on how ‘reliable’ its capacity is during the most supply-constrained times of the season.
In the winter, loss-of-load scenarios are defined by shortfalls in wind generation and cold snaps that cause outages at gas and coal plants. Load is driven by heating, which produces long plateaued peaks rather than spikes.
These constraints can last several hours to days at a time. The capacity provided by duration-limited resources (i.e., energy storage) does not help resolve these constraints and is derated accordingly.
Compare this to the summer, where loss-of-load scenarios are caused by evening spikes in net load. Fast-acting, duration-limited generators like batteries can quickly respond to meet this need, and so their ELCC factor is higher.
ELCC values change year-to-year, and payouts are defined around them
Capacity contracts pay for the accredited capacity a generator agrees to provide. If future studies reduce the generator’s accredited capacity, the contract will specify how this is accounted for.
3. How much do Resource Adequacy contracts pay?
Resource Adequacy contract prices have historically hovered around $2-3/kW-month, but payments are forecast to increase in the next few years, for two reasons.
Firstly, the penalty price to the utility for being deficient in RA capacity is set to rise. These penalties form the ceiling for Resource Adequacy payments, since rationally, utilities would only pay for RA capacity up to what it would cost them to remain deficient.
SPP charges utilities for each unit of deficient capacity. This penalty price starts at 1.25x times the Cost of New Entry (CONE) for building a simple-cycle combustion turbine - the quickest and cheapest way a utility can bring dispatchable capacity online. Penalties then rise above this level depending on how deficient a utility is.
In 2026, this reference CONE is expected to rise from $85.61/kW-year to $139.85/kW‑year to align with increasing costs for new turbines. This means the highest penalty - set at twice the CONE - is rising by 64%, from $171/kW-year ($14.2/kW-month) to $280/kW-year ($23.3/kW-month).
But capacity prices have remained at roughly $2-3/kW-month - well below the current $14.2 ceiling. This is because generators tend to bid competitively to win contracts, pushing contract prices down.
Rising reserve margins may increase RA contract prices
The second reason why capacity prices are expected to rise is in response to reserve margins rising. Utilities must procure a larger portion on top of their peak demand to comply with Resource Adequacy requirements.
Starting in 2026, reserve margins will increase from 15% to 16% in the Summer, and a new 36% margin will be introduced in the Winter. This is expected to reduce excess market capacity and raise capacity prices.
As reserve margins and the reference CONE rise, utilities will run the risk of being deficient in both the Summer and Winter seasons, which is expected to lead generators to raise their bid prices while still remaining competitive.
4. How to secure a Resource Adequacy contract
Resource Adequacy contracts are typically framed as capacity-only purchases known as Capacity Procurement Agreements (CPAs). These contracts cover 1 to 3 years of Resource Adequacy delivery, and are procured by the utility 1 to 2 years in advance.
Generators can contract their capacity to meet the Summer season requirement (June 1st through September 30th), or as of 2025, the new Winter season requirement (December 1st through March 31st).
Larger utilities procure capacity through Request For Proposals (RFPs) publicized on their websites. Smaller municipalities and cooperatives participate through joint action agencies that aggregate and run procurements on their behalf.
The proposals detail how much capacity the utility needs, when they need it, and whether the generator needs to be located in a particular area.
What obligations do these contracts put on batteries?
To secure these agreements, batteries must have their capacities accredited by SPP annually and file the results with the utility.
They must also undergo deliverability studies to ensure their accredited capacity is available to the system during peak load conditions.
These two studies produce a battery’s accredited, deliverable capacity, and is the capacity sold in RA agreements.
Finally, the battery must be available throughout the period of the contract.
SPP doesn’t explicitly carry out performance testing to verify availability, but it does monitor resources during major supply-constrained events. If an RA-contracted resource fails to respond, SPP may reduce its accredited capacity.
Generators then fill out a Resource Adequacy Workbook with the results of their studies and contractual arrangements and submit these to SPP before the 15th of February deadline.
