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4 Frequently Asked Questions about "Payment methods for high-capacity cluster energy storage cabinet"

What are capacity payments (CP)?

Capacity payments (CP) refer to the financial compensation provided to electricity consumers for securing controllable generation capacity, ensuring that their minimum consumption needs are met during adverse conditions without causing shortages in the wholesale market. You might find these chapters and articles relevant to this topic.

What is the average capacity payment?

Currently, the average capacity payment is 7.46 won/kWh. Then it is adjusted according to a predetermined schedule across different seasons and times of the day reflecting capacity scarcity by multiplying an adjustment factor (Table 22.7). The capacity payment is uniformly applied to all kinds of generation capacity. Table 22.7.

Why is capacity payment more important than energy payment?

Therefore, in this business model, the “capacity” payment, for a reduction commitment, is more important than the energy payment (an extra payment in case the DR is actually used). One attractive aspect of this business model for the DRP is that they can secure some future income before finalizing the DR infrastructure implementation.

How does capacity subscription work?

With Capacity Subscription, the required controllable generation is financed through the consumers' capacity payments. Consumption is limited to the contracted capacity for the duration of the adverse weather event, as a result of which there is no shortage on the wholesale market.

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