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M-1 Reserve Margin
 
About This Metric

Planning reserve margin is designed to measure the amount of generation capacity available to meet expected demand in planning horizon. Coupled with probabilistic analysis, calculated planning reserve margins have been an industry standard used by planners for decades as a relative indication of adequacy.
 
Planning Reserve Margin equals the difference in Deliverable or Prospective Resources and Net Internal Demand, divided by Net Internal Demand. Deliverable Resources are calculated by the sum of Existing, Certain and Future, Planned Capacity Resources plus Net Firm Transactions. Prospective Resources include Deliverable Resources and Existing, Other Resources. Net Internal Demand equals Total Internal Demand less Dispatchable, Controllable Capacity Demand Response used to reduce load (DCLM, IL, CPP w/control, LaaR).
 
Generally, the projected demand is based on a 50/50 forecast. Based on experience, for Bulk Power Systems that are not energy-constrained, reserve margin is the difference between available capacity and peak demand, normalized by peak demand shown as a percentage to maintain reliable operation while meeting unforeseen increases in demand (e.g. extreme weather) and unexpected outages of existing capacity. Further, from a planning perspective, planning reserve margin trends identify whether capacity additions are keeping up with demand growth. As this is a capacity based metric, it does not provide an accurate assessment of performance in energy limited systems, e.g., hydro capacity with limited water resources. Data used here is the same data that is submitted to NERC for seasonal and long-term reliability assessments. Figures above shows forecast net capacity reserve margin in US and Canada from 2008 to 2017.
 
NERC's Reference Reserve Margin is equivalent to the Target Reserve Margin Level provided by the Regional/subregional’s own specific margin based on load, generation, and transmission characteristics as well as regulatory requirements. If not provided, NERC assigned 15 percent Reserve Margin for predominately thermal systems and 10 percent for predominately hydro systems.
 
As the planning reserve margin is a capacity based metric, it does not provide an accurate assessment of performance in energy limited systems, e.g., hydro capacity with limited water resources.
 
Metric Definition Document
 

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