Study of capacity payment prices for IPPs in Malaysia

This paper studies capacity payment for IPPs in Malaysia. The objective of this study is to compare three types of capacity payment models for IPPs in Malaysia in term of capacity payment price and total payment to the IPPs. The models include; 1) fixed capacity payment, 2) capacity payment based on technological cluster and 3) capacity payment based on Loss of Load Probability (LOLP) as to the one used in old Electricity Pool of England and Wales. The capacity payment models have been tested using Malaysia´s power system. Result shows that total capacity payment to the IPPs from the capacity payment based on LOLP is the lowest followed by the fixed capacity payment and capacity payment based on technological cluster. Considering the capacity payment based on LOLP model in Malaysia could reduce TNB capacity payment to the IPPs.