Post implementation review of the national market for instantaneous reserves
We have completed a post-implementation review of the national market for instantaneous reserves which was introduced on 20 October 2016.
Prior to the national market, there were two separate markets for reserves, one on each island. The national market replaced these two markets by allowing reserve procured in one island to cover risk in the other. The Authority expected this would lead to increased efficiency by decreasing the overall amount of reserve needed to meet security requirements and by procuring reserve from the cheapest source nationally.
The purpose of post-implementation reviews is to evaluate an initiative against its expected outcomes. This review found that the national market for instantaneous reserve was successful in increasing the efficiency of the reserve market without sacrificing security. More reserve was procured from the South Island, where reserve is usually cheaper, and less from the North Island. However, the price of reserve in the North Island did not change significantly as a result of changes to reserve offers.