Reserve Margin
Reserve margin measures the percentage by which available firm capacity exceeds forecast peak demand for a planning period. It indicates how much cushion a system has to withstand forced outages, extreme weather, and forecast error without shedding load.
Planners calculate reserve margin by comparing accredited capacity, adjusted for derating factors, against the coincident peak load forecast. Regulatory targets vary by region and often range between 12 and 18 percent, reflecting differences in resource mix, temperature volatility, and intertie support.
Reserve margin interacts with resource adequacy constructs, capacity markets, and procurement mandates for flexible resources. As renewable penetration increases, planners supplement reserve margin with probabilistic metrics such as Loss of Load Expectation to capture the value of storage, demand response, and hybrid configurations.
Some jurisdictions layer seasonal reserve requirements or local capacity obligations on top of system-wide targets to account for transmission bottlenecks. These layered requirements influence siting decisions and how hybrid projects are sized to earn higher accreditation values.
Technical Details
- •Formula: Reserve Margin = (Accredited Capacity − Peak Load) ÷ Peak Load
- •Accreditation adjusts nameplate ratings using outage and availability factors
- •Targets often range from 12% to 18% depending on jurisdiction
- •Planning horizons typically span 1 to 10 years
- •Probabilistic metrics like LOLE and EUE complement reserve margin assessments
Why It Matters
Reserve margin targets influence how much new capacity must be built or contracted, driving investment timelines and market pricing. Tera gives investors and utilities a single view of accredited capacity, retirements, and queue additions so they can quantify reserve shortfalls and align project pipelines with upcoming procurement needs.
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