What is the primary reserve requirement based on?

The primary reserve requirement is fundamentally based on the need to maintain system reliability in the event of unexpected contingencies, primarily the largest single contingency. This approach ensures that enough reserve capacity is available to respond quickly and effectively to sudden losses in generation or transmission. By setting the requirement at 150% of the largest single contingency, it provides a buffer that not only covers the immediate need but also accounts for the time it takes to bring replacement generation online or reduce load as necessary. This level of preparedness is critical for maintaining grid stability and preventing outages, thus reinforcing the importance of having a robust reserve strategy in place based on measured risks.