Only New Resources Set Prices
Checking this box for a long-term run assures that only new resources added in the current study year are eligible to set the capacity price.
Background:
In general, when performing long-term studies that build to target reserve margins, Aurora builds an annual resource stack, sorted by profitability, in order to determine the capacity price. This profitability is not just the profits of that year, but for life of the units, and has been realized to capture the initial capital investment, time-value-of-money, etc.
As the model looks at the cumulative capacity of the resources in a pool/zone, it identifies the capacity marginal resource as the one whose capacity is needed to equal the peak demand + reserve margin target. The capacity price for the pool/zone is then set by the capacity revenue required for that resource to earn its target rate of return.
By default, this resource stack (and therefore the capacity marginal unit) will be a mix of existing and new resources. Therefore, there could be some financial incentive for an old, existing plant not to retire if the model thinks a capacity payment will retain its profitability. Selecting this option forces Aurora to determine the capacity price based on new resources only.
See the Knowledge Base article Long-Term Studies Using Reserve Margins for more information.
Only New Resources Set Prices
