What is the vertical demand curve used in MISO auctions?
In MISO auctions, a vertical demand curve is employed to determine capacity pricing. This curve represents that capacity is free or expensive, with limited pricing flexibility. The market can experience rapid fluctuations, where capacity prices can quickly switch between the two extremes. This unique characteristic of the vertical demand curve in MISO auctions distinguishes it from other markets that may have more gradual price changes based on supply and demand dynamics. This means that end users in MISO can be subject to very volatile rates, which storage is uniquely positioned to help offset.