In October 2018, the integrated single electricity market (I-SEM) is planned to go live in Ireland. The I-SEM represents a complete redesign of the wholesale energy market in Ireland with the intention of bringing Ireland in line with the European Target Model for Electricity set by the EU. The implementation of the I-SEM will facilitate the integration of Ireland with other European electricity markets and its introduction will make more markets available to generators/suppliers, including a revised capacity market and short-term trading markets. This will mean more opportunities for generating revenue, but also higher exposure to costs.
There will be a general overhaul of the principles of the market operation from centralised despatch to self-despatch. This ability to self-clear means that a single location can trade, clear and settle physical transactions in the wholesale market. Currently, energy trading starts one day before delivery but the price is settled four days after delivery.
In the I-SEM, as under the SEM, generators will earn revenue for energy provided to the system in the form of capacity payments for being available if called upon to maintain security of supply. However, the Capacity Payment Mechanism (CPM) will be replaced by the Capacity Remuneration Mechanism (CRM). Generators must bid in to an annual Capacity Auction to be awarded a capacity contract. The total volume of capacity to be auctioned will be determined by the Regulatory Authorities.
This change also sees the introduction of a number of new energy trading markets “ the Day Ahead Market, the Intra-Day Market and the Balancing Market. The effect this will have on participants’ revenues and costs remains to be seen; the introduction of the I-SEM has been delayed twice from its original start date, leaving many in a position of uncertainty.
TNEI has a wealth of experience in the power sector in Ireland. To find out more about the services we offer, download our specialist consultancy for Ireland brochure or call 0161 233 4800.
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