The Instantaneous Reserve Plant Margin (IRPM) was a metric we created with the release of NEMwatch v4 back in 2002.
We did this in order to be able to create a (non-price) real-time indicator of the the balance between supply and demand right across the NEM (which at that time included a Snowy Region, but excluded the Tasmanian region).
The IRPM was calculated as the Surplus Available Generation in the NEM divided by the Aggregate Demand across the NEM. Hence the smaller the percentage, the higher the price you’d expect to see (particularly under the “energy-only” market design).
Traditionally the Reserve Plant Margin was a metric used in electricity system planning, where installed generation capacity (i.e. maximum capacity) was used in the numerator, and anticipated peak demand was used in the denominator. Describing the Instantaneous Reserve Plant Margin on a similar basis delivered useful context.
With the release of NEMwatch v8 back in 2008, we extended the concept of IRPM into “Economic Islands” :
In doing so, we helped to explain instances where regional prices might be high (due to transmission constraints), despite a large surplus of capacity more broadly.
Specific instances of IRPM
In Appendix 1 of each GenInsights Quarterly Updates review, we include a review of instances of IRPM through the focused quarter as one of the central ‘Headline Metrics’. From these quarterly reviews, and even beforehand, specific instances of IRPM are highlighted in particular WattClarity articles:
1) Low IRPM
Periods of tight supply-demand balance (and hence low IRPM) are most important from a ‘keeping the lights on perspective’ … and they often coincide with periods of low VRE and hence high Aggregate Scheduled Target, as an indicator of the ongoing requirement for firming capacity.
Hence articles discussing such periods:
(a) Might be tagged ‘low Instantaneous Reserve Plant Margin’ and/or
(b) Might be tagged ‘low IRPM’.
2) High IRPM
However, with the emergence/amplification of boom-bust cycles given the chosen VRE + Firming nature of the energy transition, we’re seeing an escalation in periods of very high IRPM … which feed into commercial challenges for firming capacity.
Hence articles discussing such periods:
(a) Might be tagged ‘high IRPM’.
(b) Might be tagged ‘high Instantaneous Reserve Plant Margin’ and/or