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METU

Capacity Market

Capacity Market
EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAİOĞLU, Page 1

METU

Capacity Market
Operating Reserves

Main Duty of the System Operator
Main duty of the system operator is to keep operating the system always in normal and secure operating state by maintaining supplydemand balance

Basic principle for maintaining supplydemand balance: The system operator must always have a sufficient amount of operating reserve against sudden unexpected contingencies

EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAİOĞLU, Page 2

METU

Capacity Market
Generation System: Operating reserve in terms of demand;

Supply-Demand Balance and Operating Reserves
Operating reserve is measured in terms of percentage of the overall generating capacity in the system Minimum Limits for Operating Reserve: • In Planning: • In Operation: 10-30 10 % %
Units in service 300 MW 100 MW Operating reserve

300 MW
EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAİOĞLU, Page 3

Spring 2005. Electrical and Electronics Eng.METU Capacity Market Types of Operating Reserves Generation System: Operating reserve in terms of demand In principle operating reserves may be classified in two groups. but can be put in service within 10-60 minutes. • Cold operating reserves. • Hot operating reserves.. Prof. those plants. which is kept ready to put in service immediately. Osman SEVAİOĞLU. Dr. Page 4 . METU. following the order Keeping a plant as hot or cold operating reserve is something that incurs a cost to the party who benefits from this service Units in service 300 MW 100 MW Operating reserve 300 MW EE 710 Electricity Trading. Dept. which is kept ready. those plants.

Osman SEVAİOĞLU. Spring 2005.. • Full or partial capacity kept in operating reserve state. • Quickness of response: time duration needed for the plant to get into service following the order (fuel type and being in “hot” or “cold” states determines quickness). Prof. • Sureness in availability: Certainity in availability (price will depend upon this certainity) 300 MW EE 710 Electricity Trading. Dept. Dr. Page 5 .METU Capacity Market Operating Reserve Markets Units in service 3 x 100 MW 2 x 100 MW Operating reserves Ordering of Operating Reserves Plants in Operating Reserve Market are ordered with respect to their. METU. Electrical and Electronics Eng.

does not include the fuel cost. Spring 2005.. Prof. Dr. Electrical and Electronics Eng. cost of an operating reserve is the same as capacity cost. Osman SEVAİOĞLU. • Fixed Capacity Cost. METU. Dept. which comprises of two components. however. unlike the one that has been described earlier. • Variable Capacity Cost Varible Capacity Cost here.METU Capacity Market Cost of Operation Reserves Terms in Operating Reserve Cost In principle. Page 6 . EE 710 Electricity Trading.

Dept. which comprises of two components. however. • Variable Capacity Cost Varible Capacity Cost here. METU. Dr. Spring 2005. • Fixed Capacity Cost. Prof. does not include the fuel cost EE 710 Electricity Trading. Page 7 . Electrical and Electronics Eng.METU Capacity Market Cost of Operation Reserves Terms in Operating Reserve Cost In principle.. Osman SEVAİOĞLU. cost of an operating reserve is the same as capacity cost.

METU Capacity Market Cost of Operation Reserves Variable Capacity Cost . i. OMC is the total Operation and maintenance Cost..e. Dept. Osman SEVAİOĞLU. VCC = OPC + MC = OMC where. Prof. OPC is the Operation Cost.VCC of a plant is the same as the Operation and Maintenance Cost. Electrical and Electronics Eng. MC is the Maintenance Cost Like Fixed Capacity Cost. Page 8 . Spring 2005. VCC is measured in terms of.VCC Variable Capacity Cost . VCC is the Variable Capacity Cost. $ / MWh or $ / kWy EE 710 Electricity Trading. METU. Dr.

Osman SEVAİOĞLU.VCC of a plant may be combined to yield the average capacity cost of a plant. Spring 2005. ACK = FCC + VCC . Dept. VCC is the Variable Capacity Cost. Dr. METU. FCC is the Fixed Capacity Cost. Electrical and Electronics Eng. Page 9 .METU Capacity Market Cost of Operation Reserves Average Capacity Cost Fixed Capacity Cost .FCC and Variable Capacity Cost . Prof.. called the capacity factor Note that Fuel Cost term -FUC does not exist in VCC EE 710 Electricity Trading. c or y = b + ax where. cf is the combination coefficient. ACk is the average capacity cost of the plant in $ / MWh or in $ / kWy.

a competitive market will be established and it will be possible to keep the price of the most expensive generation at 100 USD / MW. Dr. 10 Cents / kWh level In that respect. Spring 2005.e. i.METU Capacity Market The Effect of Operating Reserves on Competition Minimum Operating Reserve Requirement In principle. Page 10 . Osman SEVAİOĞLU. where the available capacity exceeds demand It is widely accepted practice that when the available capacity exceeds demand by only 10 %. a competitive market requires an environment. Prof. Dept. Operating Reserves may be regarded as available excess capacity EE 710 Electricity Trading. Electrical and Electronics Eng. METU..

METU Capacity Market The Effect of Operating Reserves on Price Minimum Operating Reserve Requirement In principle. Prof. Page 11 . 188 MW EE 710 Electricity Trading. i. 10 Cents / kWh level In that respect. METU.e. Dr. where the available capacity exceeds demand so that the customer has a chance for choice It is widely accepted practice that when the available capacity exceeds demand by only 10 %.. Spring 2005. Osman SEVAİOĞLU. Electrical and Electronics Eng. a competitive market will be established and it will be possible to keep the prices of the most expensive generations at 100 USD / MW. a competitive market requires an environment. Dept. Operating Reserves may be regarded as available excess capacity Karakaya HPP.

Dept. METU. Osman SEVAİOĞLU.. Spring 2005. prices follow a trajectory (not exactly but) similar to the daily loading curve Winter Summer Off-Peak level Time (Hours) EE 710 Electricity Trading. Page 12 . driving up the prices In other words. Electrical and Electronics Eng. supply becomes tighter System operator then finds himself in a difficult situation that the operating reserves run short and he can no longer maintain 10 % operating reserves The system operator then starts offering higher prices for both the committed plants and reserves. Prof. Dr.METU Capacity Market The Effect of Operating Reserves on Price Price Spikes Peak level Total Demand (MW) As consumption increases with respect to daily load curve.

and may induce some legal consequences against the customer (utility) Hence the utility must compare the legal consequences and penalties to be arised and the price of electricity Before deciding on load shedding Price paid by the system operator to operating reserves committed real-time sets an upper limit on price in the market High prices in Forward Agreements (Hedging) induce investment Winter Summer Off-Peak level Time (Hours) EE 710 Electricity Trading. Osman SEVAİOĞLU. Page 13 .. Dr. METU.METU Capacity Market The Effect of Operating Reserves on Price Price Spikes Peak level Power Demand (MW) The last alternative is rather severe. Dept. Spring 2005. Prof. Electrical and Electronics Eng.

Dr. customers (utilities) confront with three alternatives. Spring 2005. • Letting the system operator purchase power for them in real-time in terms of real-time spot prices. Electrical and Electronics Eng. in order not to be influenced by price spikes. METU.. • Making Forward Agreements (Hedging) with suppliers and purchase power from those suppliers. Page 14 . Dept. Osman SEVAİOĞLU.METU Capacity Market The Effect of Operating Reserves on Price Price Spikes Peak level Power Demand (MW) In case the operating reserves run short and prices drive up. • Shedding the load within the period the price is high Winter Summer Off-Peak level Time (Hours) EE 710 Electricity Trading. Prof.

Spring 2005. Each self-providing plant participates in operating reserve service by its own percentage EE 710 Electricity Trading.. • Independent plants exclusively kept. • Self-providing plants with a certain percantage of their capacity kept and sold as operating reserve to system operator (not to costumers !).METU Capacity Market Self-Provision of Operating Reserves Trakya Natural Gas Plant 477 MW What is Self-Provision ? Self-provision is condition of providing both energy and operating reserve services by the same plant There are two types of operating reserves in terms of their sources. Prof. commercial operating reserve service is provided only by these plants. METU. Page 15 . Osman SEVAİOĞLU. Dr. Dept. committed and operated as operating reserves. Electrical and Electronics Eng. In this case.

price. so that they may prefer to offer the capacity corresponding to this part as operating reserve EE 710 Electricity Trading.. Dr. Spring 2005. • They may not be satisfied with the some aspects of the service. such as. METU. Prof. Page 16 . when needed. quickness and readiness. quality. Ereğli Natural Gas Plant Why self-provision is preferred ? • Plants may not be fully convinced that a commercial operating reserve service will work properly. Electrical and Electronics Eng.METU Capacity Market The need for Self-Provision Kdz. Dept. • Plants may be in difficulty in selling some part of their production within some operating periods. Osman SEVAİOĞLU.

a) energy or b) capacity EE 710 Electricity Trading.METU Capacity Market A Simple Criterion for Self-Provision Criterion Kemerköy P = 630 MW. Dr. Spring 2005. Page 17 . METU. Electrical and Electronics Eng. Dept. Prof. There is a surplus capacity that can be sold in terms of either. when. Capacity = 2392 GWh (1999). Osman SEVAİOĞLU.. 2922 GWh (2000) Self provision is to be preferred.

METU. Po&m. Penergy. respectively EE 710 Electricity Trading. Pe. Profite =Pe – (Pc + Penergy + PO&M ) Profitc =Pnl – (Pc + PO&M ) or Pe – (Pc + Penergy + PO&M ) < Pnl – (Pc + PO&M ) or Pe – Penergy < Pnl where. Prof. Osman SEVAİOĞLU. Page 18 . and the no-load operating prices. Pnl. Profite and Profitc are profits to be earned by electricity an capacity trading. energy. Dr. when. Electrical and Electronics Eng. Profite < Profitc where. Pc. Spring 2005. Dept. capacity.. are electricity. operating and maintenance.METU Capacity Market A Simple Criterion for Self-Provision Criterion Self provision is to be preferred.

Page 19 . Prof. Electrical and Electronics Eng. • Capacity factor (percentage of rated power x duration of allocation). Spring 2005. Dept.. • Certainity of availability. Osman SEVAİOĞLU. Dr.e. i. • Certainity of order. kWh or MWh. METU.METU Capacity Market Pricing of Operating Reserves Factors Determining Price of Operating Reserve Factors determining price of operating reserve service are. • Early ordering. as it depends both on capacity allocated (MW) and duration (h) EE 710 Electricity Trading. • Quickness of response. • Start-stop expenditures of the plant Units of operating reserve service is the same as that of energy.

Electrical and Electronics Eng. T is the overall duration of the availability of plant (hours) EE 710 Electricity Trading. P is the power allocated to customer. Pr is the total rated power of the plant. METU. Prof. α = ( P / Pr ) * ( t / T ) (unitless) where. α is the allocation factor. Dr. Dept. t is the total duration of service (hours). Page 20 .METU Capacity Market Allocation Factor Defininiton Allocation Factor is a measure of the percentage of capacity service allocated to customer Allocation Factor is expressed as. Spring 2005.. Osman SEVAİOĞLU.

Page 21 . x rated power) = ∫ P(t) dt / (a. METU. Dr.METU Capacity Market Capacity Factor Defininiton 4000 Capacity Factor is the ratio of the total energy supplied to the total capacity allocated Capacity Factor may be expressed as. x rated power) = Area under the curve / overall rectangular area = Area under the curve / 4000 x 24 where.f.xrated power Total Demand P(t) (MW) 3500 3000 2500 2000 1500 1000 Energy supplied 500 0 0 2 4 6 8 10 12 14 16 18 20 22 24 Time (Hours) EE 710 Electricity Trading. total capacity allocated = a.f. energy supplied is the total energy supplied during the allocated service period. Electrical and Electronics Eng. Dept.f. Spring 2005. Prof. Osman SEVAİOĞLU.. c = total energy supplied/total capacity allocated(a.

In other words. Spring 2005. capacity factor is a problem of the customer. Dr. Prof.. Dept. Proper utilization of this portion is merely a problem of the consumer. Osman SEVAİOĞLU.METU Capacity Market Capacity Factor Total Demand P(t) (MW) Defininiton Capacity factor is not a concern for the producer at all. 4000 3500 3000 2500 2000 1500 1000 Energy supplied 500 0 0 2 4 6 8 10 12 14 16 18 20 22 24 Time (Hours) EE 710 Electricity Trading. Electrical and Electronics Eng. METU. Page 22 . The producer simply allocates the ordered and committed portion of the plant and does not concern whether this portion is properly utilized by the consumer or not. allocation factor is a problem of the supplier.

Prof.94 Total Demand P(t) (MW) 3500 3000 2500 2000 1500 1000 Energy supplied 500 0 0 2 4 6 8 10 12 14 16 18 20 22 24 Time (Hours) EE 710 Electricity Trading.f. c = total energy supplied / total capacity allocated(a. Spring 2005. Dr. Dept. Electrical and Electronics Eng.METU Capacity Market Capacity Factor Example 4000 Capacity Factor of the load shown on the right hand side may be expressed as.. METU. Osman SEVAİOĞLU. x rated power) = ∫ P(t) dt / (a. Page 23 .f. x rated power) = Area under the curve / overall rectangular area = Area under the curve / 4000 x 24 = 65 000 MWh / 96 000 MWh = 0.

100 (%) Plant owner prefers higher allocated capacities.7 0.. since fixed and variable costs of service decrease with the rating (size) of the plant Principle of Economies of Scale EE 710 Electricity Trading.3 0. Dr. Osman SEVAİOĞLU.5 0.6 0. Dept. Page 24 Percentage Price (Cent/kWh) The Effect of Capacity Factor on Price . METU. Spring 2005.4 0.2 0. Electrical and Electronics Eng.1 0.9 1 Allocated Capacity (%) Percentage price(*) of operating reserve per MW decreases as the allocated capacity increases -------------------------------(*) (Price / Nominal Price) . Prof.8 0.METU Capacity Market The Effect of Allocated Capacity 160 150 140 130 120 110 100 90 80 0 0.

Electrical and Electronics Eng.2 1. Prof.6 2.8 3. Dr. Osman SEVAİOĞLU.0 2..6 T = 3.2 The Effect of Quickness of Response Quickness of response requires high flexibility and readiness of the plant which increases the price T = 1.METU Capacity Market The Effect of Quickness of Response Percentage Price (Cent/kWh) 150 140 130 120 110 100 90 80 70 0. Spring 2005.16 minutes = 1 day Log (Response Time) (minutes) EE 710 Electricity Trading. Page 25 . METU.4 2.16 101. Dept.8 1.6 = 40 minutes 103.

90 0. Osman SEVAİOĞLU.85 0. Prof.95 1.80 0.. Dr.75 0. Dept. Page 26 .METU Capacity Market The Effect of Certainity of Availability Percentage Price (Cent/kWh) 100 95 The Effect of Certainity of Availability Certainity of availability (Sureness) is a parameter influencing the price of service Price of an operating reserve increases with the certainity of availability 90 85 80 75 70 0.00 Certainity of Availability (%) EE 710 Electricity Trading. METU. Spring 2005. Electrical and Electronics Eng.

METU. the probability of not needing this operating service is 98 % Hence.1 R-2 Op. 100 % availability Assume that the contingency risk of this customer needing this operating reserve service is only 2 %.e. Reserve Market . Spring 2005. Page 27 .METU Capacity Market What is Certainity of Availability ? Operating Reserve Group Cascade operating reserve service with 98 % availability (Please note that. Prof. Dr. Osman SEVAİOĞLU. Reserve Market .2 Customer-A Customer-B EE 710 Electricity Trading. Dept.. Electrical and Electronics Eng. i. Customer-B may not receive full operating reserve service when CustomerA is serviced) Certainity of Availability Assume that the operating reserve group shown in the figure has made an agreement with Customer-A on the basis of definite availability. it is possible to make a simultaneous (cascade) agreement with Customer-B on the basis of 98 % availability. at a reduced price Operating reserve service with 100 % availability Supplier Transmission System Transmission System R-1 Op. i.e.

4 0. Page 28 .6 0..1 0. Spring 2005. Osman SEVAİOĞLU.5 0. Prof.9 1 Certainity of Order (%) EE 710 Electricity Trading. Dept.8 0. METU.2 0. Dr. Electrical and Electronics Eng.METU Capacity Market The Effect of Certainity of Order 140 Percentage Price (Cent/kWh) The Effect of Certainity of Order Certainity of order (probability of ordering) is a parameter influencing the price of service Price of an operating reserve decreses as the uncertainity of order is reduced 130 120 110 100 90 80 0 0.3 0.7 0.

Osman SEVAİOĞLU. Dept. Page 29 .METU Capacity Market The Effect of Early Ordering 150 Percentage Price (Cent/kWh) 140 130 120 110 100 90 80 70 1. Prof. Spring 2005. Electrical and Electronics Eng.5 2.5 Log (early ordering period) (minutes) The Effect of Early Ordering Early ordering provides plant operator chance to make a schedule for plant allocation which reduces the price T = 1.0 3.0 2.25 minutes = 29 Hours EE 710 Electricity Trading.. Dr. METU.5 3.25 101 = 10 minutes 103.0 T = 3.0 1.

Electrical and Electronics Eng.METU Capacity Market Superposition of Capacity Services Total Demand P(t) (MW) 40 35 30 25 20 15 10 5 0 2 4 6 8 10 12 14 16 18 20 22 24 2 4 Superposition of Capacity Services Capacity services supplied to two or more customers may be joined together gaining economy in the installed capacity of the operating reserve Time (Hours) Demand (Capacity) requested by the first customer Demand (Capacity) requested by the second customer Total Demand = 40 + 40 = 80 MW EE 710 Electricity Trading. METU.. Page 30 . Dept. Osman SEVAİOĞLU. Spring 2005. Prof. Dr.

but maximum of sum of demands. Electrical and Electronics Eng. (P1 + P2) (t)max < P1 (t)max + P2(t)max Implying that the supplier does not need to supply the sum of the maximum demands.METU Capacity Market Superposition of Capacity Services Total Demand P(t) (MW) 90 80 70 60 50 40 30 20 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Superposition of Capacity Services Please note that. the loads are diversived. Dept. Prof. Page 31 . Dr.. METU. Osman SEVAİOĞLU. i. which is more economical in terms of investments P1 (t) + P2 (t) P2 (t) P1 (t) Total Demand (Capacity) 76 MW < 80 MW EE 710 Electricity Trading.e. Spring 2005. hence their total does not make 80 MW.

2 R-3 Op.. Dr. they will function simultaneously. Reserve Market . Dept. since unsold services in one market can not flow into the others An unsold operating reserve service is nothing but keeping the plant idle.1 Supplier . Osman SEVAİOĞLU. METU.e.1 R-2 Op.3 Transmission System R-1 Op. Electrical and Electronics Eng. but separately This type of architecture results in higher prices. Page 32 . Prof. i.METU Capacity Market Linkage among Operating Reserve Markets Operating Reserve Group -1 Operating Reserve Group -2 Operating Reserve Group -3 If no linkage is established among operating reserve markets. Spring 2005. Reserve Market .3 Customer-1 Customer-2 Customer-3 EE 710 Electricity Trading. Reserve Market .2 Supplier . just waste of resource Supplier .

Dept.3 Customer-1 Customer-2 Customer-3 EE 710 Electricity Trading. METU.1 Supplier . Spring 2005. then will function simultaneously. Page 33 . starting from the one with the highest quality (price) Any surplus service in one market will flow to the other markets at a reduced price in a sequence Surplus Service Flow Surplus Service Flow Supplier .2 R-3 Op.2 Supplier . Reserve Market . Prof. Electrical and Electronics Eng. markets are cleared in sequence.3 Transmission System Linkage Regions Transmission System Linkage Regions Transmission System R-1 Op. thus lowering the prices In this case.1 R-2 Op. Reserve Market .. and unsold services will flow from one market to the others.METU Capacity Market Operating Reserve Group -1 Operating Reserve Group -2 Operating Reserve Group -3 Cascade Linkaging of Operating Reserve Markets Forward Cascading If linkage is established among operating reserve markets. Reserve Market . Osman SEVAİOĞLU. Dr.

2 R-3 Op. Reserve Market .3 Transmission System R-1 Op..2 Transmission System Linkage Regions Supplier . then price in R-3 may rise to a level above the prices in R-1 and R-2 Markets R-1 and R-2 on the other hand are already cleared at a lower price Inefficient utilization of operating reserves Surplus Service Flow Surplus Service Flow Supplier . Page 34 .3 Customer-1 Customer-2 Customer-3 EE 710 Electricity Trading.1 R-2 Op. Reserve Market . Osman SEVAİOĞLU. Dr. Spring 2005. Prof.METU Capacity Market Operating Reserve Group -1 Operating Reserve Group -2 Operating Reserve Group -3 Some Practical Problems in Cascade Linkaging If there is a shortage in the last reserve market R-3. Reserve Market . Dept. but not in the others.1 Transmission System Linkage Regions Supplier . METU. Electrical and Electronics Eng.

Electrical and Electronics Eng. Spring 2005. Reserve Markets The ideal solution is to: • increse the strength of internal linkages. METU. Reserve Market . • merge all operating reserve markets in a single market More efficient.. Reserve Market .2 Supplier .2 R-3 Op. Prof. Page 35 . but more complicated and difficult to operate The extreme model is to merge the resulting operating reserve market with the energy market forming a single complicated market Supplier .3 Transmission System R-1 Op.1 Supplier .1 R-2 Op. Dr. Osman SEVAİOĞLU. Reserve Market . Dept.METU Capacity Market Operating Reserve Group -1 Operating Reserve Group -2 Operating Reserve Group -3 Solution: Merger of Operating Reserve Markets Merger of Op.3 Regions Regions Customer-1 Customer-2 Customer-3 EE 710 Electricity Trading.

• are short term services. such as few months to few tears. Osman SEVAİOĞLU.3 Customer-3 TETAS ΔP = Pgen . Electrical and Electronics Eng.2 Linkage Regions Customer-2 Supplier -3 Transmission System R-3 Op. Prof. Page 36 . Dr. • are relatively cheaper. Reserve Market . • are relatively much more expensive. operating reserve services.1 Linkage Regions Customer-1 Supplier -2 Transmission System R-2 Op. Reserve Market . balancing and settlement services. • are received from the spot market without any contract Operating Reserve Group -1 Surplus Service Flow Operating Reserve Group -2 Surplus Service Flow Operating Reserve Group -3 Supplier -1 Transmission System R-1 Op. • are received on the basis of contracts while. Reserve Market . METU.P load EUAS Wholesale Company Load Transmission System Distribution System Pgen Pload EE 710 Electricity Trading. Dept.. • extend longer-terms. Spring 2005.METU Capacity Market Can Balancing and Settlement Service be used as Operating Reserves ? Answer The answer is No In principle.

Dr.2005) As consumption increases with respect to daily load curve. EE 710 Electricity Trading.01.. Osman SEVAİOĞLU. Prices are lower during night periods and higher during evening periods • Prices were higher in 2003 due primarily to higher fuel costs. • Price curves follow a pattern similar to those of the load duration curves. driving up the prices In other words. Page 37 .METU Capacity Market The Effect of Operating Reserves on Price Price Spikes (NYISO) (15. prices follow a trajectory (not exactly but) similar to the load duration curve Average Real-Time Prices within one-year Period Hours 2001 2002 2003 Please note that.e. Dept. Electrical and Electronics Eng. supply becomes tighter System operator then finds himself in a difficult situation that the operating reserves run short and he can no longer maintain 10 % operating reserves The system operator then starts offering higher prices for both the committed plants and reserves. Spring 2005. METU. Prof. i.

where the available capacity exceeds demand Excess capacity is provided in terms of operating reserves Birecik HPP. Dr. Dept. Page 38 . Prof. a competitive market requires a an environment. Osman SEVAİOĞLU. METU. 630 MW Spillway EE 710 Electricity Trading. Spring 2005. Electrical and Electronics Eng..METU Capacity Market The Effect of Operating Reserves on Competition Minimum Operating Reserve In principle.

Dept. Prof. Spring 2005. Page 39 . a competitive market will be established and it becomes possible to keep the price of the most expensive generation at 100 USD / MW. i.e. operating reserves may be regarded as available excess capacity Birecik HPP. 630 MW EE 710 Electricity Trading. METU. Osman SEVAİOĞLU. 10 Cents / kWh level In that respect. Dr. Electrical and Electronics Eng.METU Capacity Market The Effect of Operating Reserves on Competition Minimum Operating Reserve It is a widely accepted practice that when the available capacity exceeds demand by only 10 -15 %..