Stress Signals from the Grid: What the 2025/26 MISO Capacity Auction Reveals

As prices spike and margins narrow, the Midcontinent region faces a preview of reliability risks ahead.

In April 2025, the Midcontinent Independent System Operator (MISO) released the results of its capacity auction for the upcoming 2025/26 planning year. The numbers were unambiguous: summer capacity prices had surged to record highs, exposing a system under increasing strain.

For energy professionals and system planners, the results point to more than just a volatile auction cycle. They reveal deeper structural pressures on resource adequacy and highlight the growing divergence between long-term decarbonization goals and short-term reliability needs.

A Capacity Price Spike, and What It Means

MISO’s summer capacity price cleared at $666.50 per megawatt-day, a staggering increase from the $30 per MW-day level seen just one year prior. This jump occurred even as MISO implemented a new market design intended to reduce pricing volatility. That it failed to contain the surge underscores just how tight the supply-demand balance has become.

The spike reflects a significant drop in surplus accredited capacity. While the system maintained a narrow reserve margin—just over 10 percent in the North/Central region and 8.7 percent in the South—it now operates with considerably less headroom than in past years. These margins are above the summer Planning Reserve Margin requirement of 7.9 percent, but not comfortably so.

What’s Behind the Tightening?

At a glance, the raw numbers might not seem alarming. MISO added over 5 gigawatts of new accredited capacity for 2025/26, with another 1.2 gigawatts of improvements in existing units. But these gains were offset by a comparable wave of losses: nearly 5 gigawatts in de-accreditations, 3.3 gigawatts in plant suspensions and retirements, and nearly 1 gigawatt in reduced imports.

The net result is a region standing still in terms of capacity—even as demand profiles continue to rise and the energy mix becomes more variable. The summer in particular has become a flashpoint. While winter clearing prices remained modest and spring and fall prices moderate, the summer auction stood out as a singular stress indicator.

A New Market Design Meets Old Constraints

This year’s auction marked the first implementation of MISO’s Reliability-Based Demand Curve (RBDC), a long-planned reform intended to create a more stable and economically efficient capacity market. Unlike previous auctions, which used a fixed capacity requirement, the RBDC introduces a downward-sloping demand curve that reflects the declining marginal value of capacity beyond the reliability target.

The theory is sound: under the RBDC, prices should remain more stable in years with surplus and climb gradually in tighter conditions. But the outcome in this auction suggests that even with better-designed pricing mechanics, the market fundamentals can override theory. When dispatchable, accredited capacity is in short supply during the season of highest risk, prices will rise—sharply.

Implications Across the Power Sector

For generators, particularly those with firm capacity and summer availability, the auction represents a substantial revenue opportunity. Dual-fuel turbines, fast-start gas units, and dispatchable storage with sufficient duration will benefit from these high prices. But so too will their performance be under increased scrutiny. High prices bring higher expectations—and potentially steeper consequences for non-delivery.

For utilities, especially those facing load growth and aging infrastructure, the message is clear: reliability is becoming more expensive. Capacity costs will now claim a larger share of resource planning budgets, and those who fail to secure firm resources in advance may find themselves exposed in future planning years.

For policymakers, the auction offers a sharp reminder that the physics of the grid do not yield to ambition. Policies that encourage the rapid retirement of thermal capacity and aggressive renewable additions must be matched by real investment in backup, balancing, and long-duration storage. Otherwise, the market will price the risk—and the customer will pay for it.

The Broader Meaning Behind $666.50/MW-Day

Markets don’t generate power, but they do reveal priorities. The clearing price in MISO’s 2025/26 summer auction was not just a signal of tight conditions—it was a forecast of the operational challenges ahead.

Without meaningful additions in dispatchable or duration-based resources, the Midcontinent region could see more frequent price spikes, increased reliance on emergency measures, and growing concern from regulators and ratepayers alike.

This is not yet a crisis. But it is a warning. A system operating this close to its reserve threshold does not have much room for error. A single extreme weather event, transmission bottleneck, or unexpected unit failure could quickly exhaust available reserves.

Final Thoughts

The MISO capacity auction for 2025/26 didn’t just reflect short-term trends—it exposed systemic pressures that will define the decade ahead. As load shapes evolve, thermal retirements accelerate, and clean energy deployment outpaces firm capacity investment, the balance becomes more precarious.

The market is doing its job by sending clear price signals. The question now is whether planners, developers, and policymakers will respond in time—or wait until those signals become consequences.

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