Market Integration Project
Agenda
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Background
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Single Electricity Market Organisation
EU Internal Energy Market
Context for Market Design
Market Integration Project
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Project Timetable
Main Risks
Options under consideration
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Option Detail
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Engagement
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Next Steps
2
Single Electricity Market Organisation
3
Current SEMC Members
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Bill Emery (UR)
David Newbery (Independent)
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Dermot Nolan (CER)
Garrett Blaney (CER)
Odd Håkon Hoelsæter (Independent)
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Paul McGowan (CER)
Jenny Pyper (UR)
http://www.allislandproject.org/
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EU Internal Energy Market
EU energy policy aims –
Improve competitiveness to reduce prices to
consumers
Maintain security of supply
Sustainable
Vision of decarbonising Europe
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EU Internal Energy Market
– Third Energy Package (IME3).
– Target Model for cross-border trading rules.
– This requirement is legally binding and is therefore the
responsibility of the national states.
– (DETI) and (DCENR) respectively have charged the SEM
Committee (SEMC) with responsibility for developing trading
arrangements that will be compliant with the Target Model.
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Context for Market Design
Target Model
SEM
Context for Market Design
– Size of the Irish electricity market
– Physical Constraints
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Limited DC interconnection
2nd North / South Interconnector
Donegal
Cork
– Market power
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ESB generation portfolio all island (50%)
AES in NI (70%)
– Renewable energy 40% target (NI Executive
and RoI target)
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Context for Market Design
Peak demand of selected European markets in 2012
120
102.1
Peak demand (GW)
100
81.9
80
60
59.0
54.1
43.5
40
23.4
20
18.4
14.2
9.9
6.2
6.0
4.4
2.1
1.9
1.6
1.4
0
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Context for Market Design
Generation capacity by owner
5000
4500
Installed capacity (MW)
4000
3500
3000
2500
2000
1500
1000
500
0
ESB
Gas
AES
Coal
SSE
Wind
Viridian
Oil
Peat
Bord Gais
Tynagh
Pump Storage
Bord na
Mona
Hydro
Aughinish
Other
Aggregated
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Context for Market Design
+
-
Target Model
Compatible
Suitable to
ROI/NI
+
Suitable to
ROI/NI
SEM
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Target Model
Compatible
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Context for Market Design
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Project Timeline
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Started 2010
Intra day trading introduced 2011
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Consideration Day Ahead Market trading
Delivery date of 2014
Derogation of implementation to 2016 for SEM
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May 2013 Next Steps Paper
February 2014: Consultation Paper
2 months on 4 options
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Project Governance
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Project Timeline
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May 2014 Proposed Decision Consultation
CBA of Proposed Decision
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August 2014: Final Decision High Level Design
Future work areas
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Legislative change
Consultation Detailed Design
Systems development / regulatory framework
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Options Under Consideration
1. Adapted Decentralised Market
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Emphasis on allowing market participants greater choice over the markets and
timeframes in which they trade energy in order to manage their risk.
2. Mandatory Ex-post pool for net volumes
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Some choice for market participants around their trading times, but ultimately
relies on a robust centralised approach to the determination of dispatch and
ex-post prices and volumes
3. Mandatory Centralised Market
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emphasises the importance of the Day Ahead Market as the main market for
physical trading of energy between market participants. Balance takes place in
day.
4. Gross Pool – Net Settlement Market
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Centralised approach to the determination of dispatch and ex-post prices and
volumes. It is open for market participants to carry out voluntary financial
trading in other timeframes. Closest to current market.
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Project Main Risks
• Infringement of member state (non compliance 2016)
• Market not fully effective leading to increased prices
for customers
• Issues– EU Codes and guidance not finalised (state aid concerns)
– Effective stakeholder engagement
– Market Design agreement required by both Departments /
Ras
– Legislative change requirements
– Resource constraints Industry, TSOs and Departments
– Very compressed timescales for delivery
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Questions?
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Option Detail
Option 1
Option 2
Option 3
Option 4
Questions?
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Stakeholder Engagement
Engagement
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Main Stakeholder Groups
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Market Participants
SEM Committee
Departments
Regulators
EU organizations (ACER/EC).
Open Stakeholder forums
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October 2013
February 2014 (19th Provisional Date)
High Level Design Group (Industry Experts
Group)
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Monthly Meetings since October 2013
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Questions?
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Next Steps
Project Timeline
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February 2014 Consultation 4 options
19th February Stakeholder Workshop
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May 2014 Proposed Decision Consultation
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Cost benefit Analysis Included
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August 2014: Final Decision High Level Design
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Future work areas
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Detailed Market Design (Inter Alia: CRM, treatment of
losses, Market Power Mitigation Measures)
Legislative change
Consultation Detailed Design
Systems development / regulatory framework
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Questions?
30