Single Wholesale Electricity Market on Island of Ireland. Andrew Ebrill, CEER Secretary General

Transcription

1 Single Wholesale Electricity Market on Island of Ireland Andrew Ebrill, CEER Secretary General ERRA Chairmen Meeting, 19 October 2016

2 CEER: Voice of Europe s Energy Regulators A platform for cooperation among over 30 NRAs in EU and beyond Fosters competitive, secure and sustainable markets in the interests of energy consumers Champions sound energy regulation with stakeholders, incl. policy-makers Supports NRAs and encourages best practices: Training Academy Workshops and events Internal and external regulatory papers Putting consumers at the heart of energy policy: RASP and 2020 Vision 2

3 Agenda High-Level Design of All-island Wholesale Market Change Afoot: Renewables and Market Intregration into EU Target Model Challenges 3

4 Context: Location and Policy An island at the edge of the EU Security of Supply Sustainability Competitive Prices

5 Single Electricity Market All-island dual currency wholesale electricity market, one of 1 st in EU, established Nov. 07 One market, one operator, one regulatory regime: A step beyond traditional regional cooperation, not just X-border Single Institutional Framework - SEM Committee: Consists of CER, UR and an independent member Considers interests of all-island customer, not Irl or NI-only Mandatory all-island wholesale centralised pool for key gens and suppliers SEM determines a single wholesale electricity price - SMP - across the island

6 Single Electricity Market Generators Generators bid in SRMC and if scheduled generate power Generators receive SMP Wholesale Market Pool Suppliers take power at SMP Suppliers pay SMP Suppliers Retail Market Customers consume power Customers pay supplier Customers

7 Single Electricity Market /MWh SMP Generator - Out of merit Generator Inframarginal rent Generator SRMC Demand Plus capacity payment mechanism: price set by SEM C based on new peaker plant

8 jan. 08 jún. 08 nov. 08 ápr. 09 szept. 09 febr. 10 júl. 10 dec. 10 máj. 11 okt. 11 márc. 12 aug. 12 jan. 13 jún. 13 nov. 13 ápr. 14 szept. 14 febr. 15 júl. 15 SMP /MWh Gas c/therm SEM is based on cheapest Gens to meet all-island demand Price follows gas as it is 50-60% of generation: market delivers efficient prices and transparency Single Electricity Market SMP & Gas Price SMP NBP Gas

9 SEM Market Share ESB spot market share 2014 ~ 47%

10 Regulatory Market Power Mitigation Measures Bidding Code of Practise: Gens bid in SRMC Market Monitoring: MMU monitors gen adherence to BCOP Directed Contracts: RAs regulate some CfDs to reduce incentive for gens with market power (ESB currently) to bid over SRMC Vertical ring-fencing of ESB & Viridian via licence Measures are arguably second-best to a structural solution, but have proved effective

11 SEM Achievements Strong regulatory oversight, good transparency No evidence of market power abuse: SMP efficiently tracking fuel inputs SEM has encouraged over 3,000 MW of new gas gens and wind into market, providing healthy generation margin, efficient prices and environmental benefits => SEM is benefiting customer by delivering the three energy pillars: security of supply, competitive prices and sustainable development

12 SEM Achievements Strong regulatory oversight, good transparency No evidence of market power abuse: SMP efficiently tracking fuel inputs SEM has encouraged over 3,000 MW of new gas gens and wind into market, providing healthy generation margin, efficient prices and environmental benefits => SEM is benefiting customer by delivering the three energy pillars: security of supply, competitive prices and sustainable development

13 Change Afoot: Renewables Growth Big rise in RES over last decade to circa 25% production: Govt. target of 40% for 2020 to help meet Irl s EU 2020 obligations Irl Fuel Mix Over Last Month, Source EirGrid

14 Change Afoot: Renewables Growth Non-sychronous wind raises technical and market challenges

15 DS3 Programme Financial mix in the market will likely move to higher fixed cost, lower variable cost, via DS3

16 DS3 Programme DS3 will lower wind curtailment, facilitating an efficient achievement of the 2020 targets

17 New I-SEM and EU I-SEM is a new wholesale market to go-live in Q to meet EU Target Model / CACM obligations I-SEM will allow for more efficient EU X-border flows Capacity payments planned but more market-focused: auction of reliability options Should help put downward pressure on wholesale prices 17

18 Challenges Cross-border decision-making has worked but not always easy! Natural challenges around cost allocation Institutional: 2 regulators, one market Tricky: what is a SEM matter? Anything that materially affects SEM or is likely to What is a SEM matter? Who decides on this? Decides in relation to SEM matters SEM C Renewables and EU Integration / Network Codes 18

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