Reserve Capacity security
A market participant must post a security deposit with AEMO when it seeks capacity credits for a facility that has not yet entered service.
Security can be a bank guarantee, bank undertaking, or a cash deposit, and is set at 25% of the benchmark reserve capacity price multiplied by the number of capacity credits sought.
Reserve capacity security is generally provided when:
- Bilateral trade declarations are made.
- An offer is submitted into the Reserve Capacity Auction (if one is held).
Security is returned when the facility fails to secure capacity credits, or satisfies its capacity obligations by operating as required. Otherwise, security is returned at the end of the capacity year if the facility has operated at 90%. Security is drawn down if the facility fails to reach at least 90% of required output.
AEMO will use security to purchase supplementary reserve capacity if required, and use the remainder to refund market customers.