Reserve Capacity - Ongoing

Hi SAM team / users - I'm looking to see how to incorporate Reserve Capacity revenue into the model.

In Western Australia, generators are paid an annual rate for having a certain quantity (MW) of power available for reserve capacity. This payment is an annual amount based on the nameplate and capacity factor of the generator - e.g. a 20% CF 10MW solar farm would have a 2MW reserve capacity amount, which has a certain revenue attache to it (for example, $1m/MW, so $2m/yr). What is the best way to incorporate this type of revenue stream into SAM?

I have tried using the CBI on the Incentives tab, but when I export the data to excel it appears to only add that value for year 1. Am I doing something wrong or is there a better way to handle this? Many thanks for your assistance.

Hello,

I don't think you've done anything wrong -- the CBI and IBI incentives are payments the project receives in Year 1.

You could use the PBI (production-based incentive) to account for the payment. SAM calculates the PBI payment by multiplying the $/kWh rate you provide on the Incentives page by the system's total annual output in kWh, reported in the Energy row at the top of the cash flow, so you will have to calculate the appropriate rate after running a simulation to see what the annual output is. If the degradation rate on the Lifetime input is not zero, the annual energy value changes from year to year, so you will need to account for that, perhaps by using the PBI's escalation rate to adjust the PBI amount accordingly.

Best regards,
Paul.

Hi Paul,

Thanks for your help - much appreciated. It starts to muddy the waters as in Aus we also have a PBI that is paid out as a Renewable Energy Certificate per MWh, and would like to keep the two revenue streams separate if possible. Is the ongoing CBI an uncommon market structure?

Cheers,
Steve

Hi Steve,

One way to keep the revenue streams separate would be to use a separate PBI for each incentive. For example, you could use the "Federal" CBI for the renewable energy certificate, and the "State" PBI for the annual capacity-based payment. (Be sure to indicate whether each is considered taxable income.)

I'm not sure how common this type of incentive is. In order for us to make it possible to model annual payments in SAM, we would need to convert the input from a single value to an array. One question that would raise is how to handle the maximum value input. In your case, is there a limit on the amount of the CBI payment? And, if so, is that limit on an annual basis, or cumulative over the payment period?

Best regards,
Paul.