Strike price for capacity mechanism
Planning our electric future: a White Paper for secure, affordable and low-carbon electricity, Glossary, published by the Department of Energy & Climate Change on 14 July 2011, defines the strike price for capacity mechanism as the: ‘Price agreed by the parties under a reliability contract for a Reliability Market form of Capacity Mechanism. The strike price represents the effective maximum price that the electricity buyer will have to pay for the volume agreed in the contract. When the market price is higher than the strike price the provider of capacity pays the buyer the difference in price for the total volume of electricity agreed.’
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