Update to Load Following Capacity Obligation calculation inputs

This page provides full details of the proposed change, relevant dates, and decisions.

What is the issue?

Currently, the Capacity Market (CM) Rules detail in 8.5.3 how to calculate Load Following Capacity Obligation (LFCO). This calculation includes the term Reserve for Response (RfR), which is defined as the amount of Mega Watts (MW) “which shall be published by the Delivery Body in the most recent electricity capacity report before the relevant Auction Window for the relevant Delivery Year.”

The intent RfR is for capacity to be held back for large infeed losses on the system. However, in practice to maintain system operability in the event there is a loss of generating capacity/transmission loss the National Energy System Operator (NESO) holds Reserve and Response (RaR) capacity as it is what is used within the Electricity Capacity Report (ERC); the ERC produces modeling for the CM. Therefore, the Rules and practice are not aligned. This is an issue as it could affect the understanding by Capacity Providers of their obligation during a System Stress Event.

Further, to introduce additional clarity into the Rules, to avoid any future issues, the RaR figure used within the LFCO calculation should the defined as the ‘Base Case’ published in the most recent ECR containing that Delivery Year.

What is the proposed solution?

To resolve the issues it is proposed to amend the CM rules by:

• updating the term used in the LFCO calculation to be RaR as well it’s definition;
• adding wording that clarifies RaR will be associated with the Base Case published in the Electricity Capacity Report (ECR); and
• introducing wording to clarify that the applicable RaR is the one published in the most recent ECR that contains that Delivery Year.