Capacity Price Objective
This setting controls mutually exclusive capacity price options. The difference between the two options is the degree to which the outputs (calculated capacity prices) are smoothed.
When using reserve margin targets, the model calculates annual capacity prices based on the money needed to make the marginal capacity unit whole. They represent the missing revenue needed to meet planning reserve margins.
Available options include:
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Minimize Cap Price Volatility
This option preserves the original method. After capacity prices are calculated, Aurora smooths them to decrease drastic jumps between years. Using this switch will minimize large swings in capacity prices, but the marginal resources may over-earn or under-earn. It should be noted that in order to be consistent with assumptions regarding end effects (that resource values in the last year of the simulation will continue) the model needs 30 years so the last year of the study may be replicated until the 30 year time frame is met.
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Minimize Resource Value Mismatch (recommended)
Selecting this option informs the model not to smooth the capacity prices. Capacity prices will most likely be more volatile from year to year, especially if marginal resource type changes. Generally, the marginal resource’s total value will tend to be closer to zero using this switch and you should see lowest RLV of new resources near 0.
As you can see from the sample runs below, the results will be similar, but not necessarily identical.
See the Knowledge Base article Long-Term Studies Using Reserve Margins for more information.
Capacity Price Objective
