Maximum Reserve Capacity Price
The Maximum Reserve Capacity Price (MRCP) sets the maximum price that may be offered in a Reserve Capacity Auction and is also used to set an administered Reserve Capacity Price if no auction is required. Each year, AEMO is required to determine the MRCP in accordance with the Market Procedure: Maximum Reserve Capacity Price.
The MRCP aims to establish the marginal cost of providing additional Reserve Capacity in each Capacity Year. The MRCP is calculated by undertaking a technical, bottom-up cost evaluation of the entry of a 160 MW open cycle gas turbine generation facility in the WEM in the relevant Capacity Year.
The steps AEMO follows to complete the annual review of the MRCP are:
- calculate the draft value of the MRCP and publish the results in a draft report;
- request public submissions on the draft report;
- assess public submissions and adjust the MRCP if appropriate;
- submit the final value of the MRCP in a final report to the Economic Regulation Authority (ERA) for approval; and
- publish the final report once it has been approved by the ERA.
The draft MRCP calculated for the 2016 Reserve Capacity Cycle is $156,400 per MW per year for the Capacity Year from 1 October 2018 to 1 October 2019.
For more information on the 2016 and previous MRCPs, please see the accompanying reports below.
Historical Maximum Reserve Capacity Prices
The MRCP was set at $150,000 per MW per year for the first Reserve Capacity Cycle, applying from market start to 1 October 2008. The figure below shows the breakdown of the cost components of the MRCP for the 2008-09 to 2018-19 Capacity Cycles.
The table below shows the MRCP and Reserve Capacity Price for each Capacity Year since market start. The Reserve Capacity Price is paid by AEMO for Capacity Credits not bilaterally traded between Market Participants. Historically, the Reserve Capacity Price has been lower than the MRCP as a result of excess capacity in the SWIS.
2016 Maximum Reserve Capacity Price
The IMO prepared the Draft Report: 2016 Maximum Reserve Capacity Price for the 2018-19 Capacity Year. In the Draft Report, the IMO proposed that the 2016 MRCP is $156,400 per MW per year.
AEMO invites submissions from all sectors of the Western Australian energy industry, including end users, on the proposed 2016 MRCP. Guidelines for submissions can be found in the draft report. The deadline for submissions is 4:00PM (Western Standard Time) on Friday 4 December 2015.
Copies of the relevant documents can be found below.
2015 Maximum Reserve Capacity Price (for 2017-18)
For the 2017-18 Capacity Year, the IMO proposed a final revised value for the Maximum Reserve Capacity Price of $164,800 per MW per year to the Economic Regulation Authority (ERA).
This value was approved by the ERA on 30 January 2015 in accordance with clause 2.26 of the Market Rules. The Maximum Reserve Capacity Price of $164,800 per MW per year will be effective from 1 October 2017 to 1 October 2018.
Copies of the various relevant documents can be found below.
Previous Maximum Reserve Capacity Prices (before 2015)
MRCP determinations made before 2015 can be found here.