Reserve Capacity Security
When a Market Participant seeks assignment of Capacity Credits for a facility that has not yet entered service, it must post a security deposit with the IMO.
Reserve Capacity Security can be provided in the form of a guarantee, a bank undertaking or in the form of a cash Security Deposit and is set at 25% of the Maximum Reserve Capacity Price for each Capacity Credit assigned to the facility.
Reserve Capacity Security is typically provided at the time of:
- the Bilateral Trade Declaration, for capacity that will be traded bilaterally; or
- the submission of offers for the Reserve Capacity Auction, for capacity offered into the auction.
The Reserve Capacity Security is then:
- returned if the facility fails to secure Capacity Credits or reaches 100% of the required output level, thus satisfying its capacity obligations;
- returned at the end of the Capacity Year if the facility reaches 90% of the required output level; or
- drawn down by the IMO if 90% of the required output level is not reached.
In the event that the IMO draws on a security deposit, this will be used to offset the cost of any Supplementary Reserve Capacity, with the remainder refunded to Market Customers.
Additional information on the lodgement of Security Deposits can be found on the Prudential Information page.
Proforma Reserve Capacity Security documents can be found on the Market Forms page.