One of the IMO’s central roles is to ensure there is adequate generation capacity in the SWIS (South West interconnected system). It achieves this through the Reserve Capacity Mechanism (RCM).
The RCM requires that retailers either secure adequate capacity bilaterally or purchase it from the IMO to ensure the SWIS generation capacity requirements are met.
The RCM has provided positive outcomes for the Western Australian economy with more than 2,500 MW of new generation plant and Demand Side Management (DSM) having been committed over the past six years.
Not only is this investment helping to ensure reliability of supply, but the increasing number of Market Participants is providing greater competition in the Market.
Reserve Capacity Mechanism Performance
The RCM has performed well since it was introduced:
In 2006, at commencement of the WEM there were 9 Market Generators
In 2011/12 there are 24 Market Generators
Over 300 MW has been provided through facility upgrades
Over 250 MW of Demand Side Management has entered the Market since 2006
Since market start Verve Energy's market share has decreased as follows:
– 90% at market commencement
– 57% in 2011/12