CAISO LMP Merchant Curve — California Power Price Forecasts

The duck curve refers to the characteristic shape of CAISO’s net load profile, which resembles a duck in cross-section. As solar generation peaks at midday, net load (total demand minus solar output) drops sharply, suppressing LMP to near zero or negative values in shoulder and spring months. In the late afternoon, solar output drops while demand rises, requiring rapid ramp-up of dispatchable resources and creating a sharp LMP spike during the evening peak. For merchant curve purposes, this means simple flat annual average prices are structurally misleading for any asset with a time-varying output profile. Solar projects produce most of their energy during the low-price midday window, incurring a shape discount. Storage assets generate their primary energy revenue by buying cheap midday energy and selling during the evening ramp. Noreva models the duck curve’s evolution over time as solar capacity continues to grow and storage penetration changes the ramp dynamics. See our detailed duck curve pricing analysis.

NP15 and SP15 are the two main pricing hubs in CAISO, corresponding to Northern and Southern California respectively. NP15 covers PG&E territory and is influenced by hydro resources from the Sierra Nevada, Bay Area load, and Central Valley solar. SP15 covers SCE and SDG&E territory and is shaped by Los Angeles basin demand, desert solar resources, and imports from the Southwest. The two hubs diverge when transmission constraints limit north-south power flows across the Path 26 interface. During periods of high Northern California hydro output, excess generation can push NP15 prices below SP15 if Path 26 is congested. Conversely, during Southern California heat events, high local demand can push SP15 above NP15 if import capacity is constrained. Basis between NP15 and SP15 has historically ranged from minimal to several dollars per MWh on an annual average basis, with intraday divergence being considerably larger.

The Extended Day-Ahead Market (EDAM), launched in May 2026, links CAISO’s day-ahead market with PacifiCorp and other Western balancing authorities, enabling resource sharing across a broader footprint in the day-ahead timeframe. Before EDAM, Western utilities outside CAISO managed their day-ahead positions bilaterally, meaning CAISO’s solar surplus was often stranded rather than exported to neighbors who could absorb it. EDAM creates a centralized optimization across participating utilities, which should reduce curtailment during high-solar periods and improve overall resource efficiency. For price forecasting, EDAM implies greater price convergence between CAISO and neighboring systems during conditions where arbitrage flows are unconstrained. However, transmission limitations between the CAISO and PacifiCorp footprints mean that residual basis will persist. Our EDAM launch day briefing covers the first-day market outcomes and what they signal for forward price formation.

Battery storage revenue in CAISO comes from three primary sources: energy arbitrage (the spread between low midday prices and high evening prices), ancillary services (regulation up, regulation down, and spinning reserve capacity payments), and capacity market participation under the Resource Adequacy framework. Noreva’s CAISO merchant curves provide the hourly price distributions needed to model energy arbitrage revenue under different dispatch strategies. For a given storage asset’s duration, round-trip efficiency, and degradation profile, the forward price distribution determines the achievable spread across the charge/discharge cycle. The model accounts for market saturation effects as storage capacity grows: as more storage participates in the evening ramp, the spread compresses over time. Noreva produces scenario-based storage revenue outputs that show a range of outcomes tied to storage deployment trajectories and policy assumptions affecting Resource Adequacy capacity prices.