How to calculate the reserve margin

Updated April 17, 2017

The reserve margin is also known as reserve capacity. It is the measurement of an energy company's capacity to generate more energy than the system generally requires at peak usage, or the amount of unused energy available when the system is at peak usage. Regulators generally require reserve margins of 10 to 20 per cent so energy companies are prepared for sudden spikes in energy usage. This is a simple figure to calculate.

Measure or determine the normal peak demand level of your energy system.

Determine the total capacity of your entire energy plant or system.

Subtract the peak demand level from the total capacity of your energy system. This number is your reserve margin, or reserve capacity.

Divide the reserve margin by the normal peak capacity, and multiply that number by 100 to get the reserve margin as a per cent of your normal peak capacity. If your answer is "15.5," for example, then your reserve margin is 15.5 per cent of your normal peak capacity.

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Alane Michaelson began writing professionally in 2002. Her work has appeared in Michigan publications such as the "Detroit Free Press" and the "Flint Journal." Michaelson graduated from Oakland University in 2006, earning a Bachelor of Arts in journalism.