Nameplate MW are not a capacity revenue forecast
A Western Australian storage proposal uses its 100 MW nameplate rating to forecast capacity income. A reviewer asks whether the model uses assigned credits, the relevant price and delivery obligations.
Permanent case linkYour task
Replace nameplate-based revenue with the assumed assigned-credit calculation and test lower credits and a lower applicable price.
Your role
WEM investment analyst checking a storage business case
Practice data & worked solution
Check the revenue entitlement before multiplying
Original synthetic annual screen for a 100 MW facility. A single simplified paid capacity product is assumed at A$150,000 per assigned MW-year. This is not an actual WEM price, certification method or combined Peak/Flexible Capacity Credit formula. Estimated annual availability-related deductions A$0.6m; fixed opex A$3m. Exclude energy/services income, capex, debt, tax and all other charges.
| Scenario | Nameplate MW | Assumed paid credits MW | Price AUD per MW-year | Deductions AUD m | Fixed opex AUD m |
|---|---|---|---|---|---|
| Base | 100 | 80 | 150000 | 0.6 | 3 |
| Lower credits | 100 | 65 | 150000 | 0.6 | 3 |
Your analysis
- Calculate gross capacity income and contribution after the assumed deductions and opex. Quantify the error from using nameplate MW in the base case.
- Reduce the price to A$120,000/MW-year while retaining 65 paid MW. Find the paid MW required to cover the assumed deductions and opex at this price.
- Explain why the positive contribution does not establish project value or prove eligibility for actual capacity payments.
Worked solution
Use assigned quantities
Base gross income is 80 × 150,000 = A$12m; contribution after deductions and fixed opex is A$8.4m. Using nameplate would give A$15m, overstating gross income by A$3m. At 65 paid MW, gross income is A$9.75m and contribution A$6.15m.
Combined downside
At 65 MW and A$120,000/MW-year, gross income is A$7.8m and contribution A$4.2m. Under the fixed-deduction simplification, break-even paid capacity is (0.6m + 3m)/120,000 = 30 MW. Actual deductions and obligations may change with capacity and availability.
Decision boundary
Contribution excludes capital recovery, financing and other costs, so it is not net profit or NPV. Obtain the actual certification and credit assignment, applicable product and price, connection rights, duration and availability obligations, and deduction rules for the relevant year. Do not add Peak and Flexible products without checking how their payments interact.
Review your response
- Entitlement: nameplate, certified capacity and assigned credits are not treated as interchangeable.
- Cash: gross income, deductions and contribution reconcile.
- Sensitivity: lower credit and price assumptions are tested together.
- Scope: no invented input is labelled an official WEM parameter or a guaranteed revenue stream.
This checklist supports self-review. No tutor marking or independent credential is included.
Related topics 4
Sources & evidence
All figures are original teaching inputs, not observations or published forecasts. The official source supplies industry context, not this dataset. Source link checked 17 October 2026. Use AEMO's current assignment and pricing publications for a real assessment. The values here do not reproduce a published Capacity Year or a certification assessment.
AEMO assignment of Capacity Credits