Reserve Capacity Price

The administrative Reserve Capacity Price is the price paid by AEMO for Capacity Credits in the Wholesale Electricity Market (WEM). AEMO calculates the price based on a formula set in the WEM Rules. Key components of the Reserve Capacity Price include the Benchmark Reserve Capacity Price (BRCP) and the level of excess capacity each Capacity Year.  

The Minister for Energy amended the WEM Rules on 11 February 2020 to implement changes to the Reserve Capacity Price from the 2019 Reserve Capacity Cycle. The pricing curve has been changed to increase responsiveness to the excess or shortages of capacity.

The WEM Rule amendments have introduced transitional arrangements for generation Facilities that have been assigned Capacity Credits in the 2018 Reserve Capacity Cycle. Transitional Facilities received a price floor of $114,000 and a price cap of $140,000 for the 2019 Reserve Capacity Cycle which will be subject to CPI adjustments for the subsequent 10 years. 

New generation Facilities will have the option of taking the Reserve Capacity Price calculated each Capacity Year or locking in the price they receive in their first year of entry for the following five consecutive years (Fixed Price Facility). 

Demand Side Management Facilities will receive the Reserve Capacity Price but are not eligible to be a Transitional or Fixed Price Facility.  

More details on the rule amendments can be found here.

In accordance with clause 4.20.5AA and 4.29.1CA of the WEM Rules, AEMO publishes a summary of the aggregate quantity of Capacity Credits assigned at each price for the relevant Reserve Capacity Cycle along with the Transitional Ceiling and Floor amounts.

Reserve Capacity Process for the 2023 Reserve Capacity Cycle (2025-2026 Capacity Year)

NOTE: Transitional Floor Price $126,555.41 and Transitional Ceiling Price $155,418.93

There are no Fixed Price Facilities or Special Reserve Capacity Prices for the 2023 Reserve Capacity Cycle.