Market Evolution in Ireland
APEX 2004 Annual Conference
Ann Scully
Manager, Market Operations
ESB National Grid
NATIONAL GRID
Irish Power System

LOGUESTOWN
COOLKEERAGH
LIMAVADY
KILTOY
LISAGHMORE
LETTERKENNY
BALLYMENA
STRABANE
MAGHERAFELT
BINBANE
LARNE
KELLS
POWER STN WEST
HANNAHSTOWN
CATHALEEN'S
CLIFF
FALL
RATHGAEL
CASTLEREAGH
LISBURN
DUNGANNON
BALLYLUMFOR
WARINGSTOWN

BALLYAHINCH
BANBRIDGE
TANDRAGEE
ENNISKILLEN
TAWNAGHMORE
BELLACORICK
NEWRY
ARIGNA
LOUTH
MEATH HILL
GILRA
LANESBORO
DRYBRIDGE
NAVAN
RICHMOND

Transmission system incl 400, 220
& 110kV networks, approx 5,800kM
of line

Main load centre is on the east
coast - Population density is low
particularly on west and north west
coast.

Many areas served only by 110kV

Investment of €2.6bn in
transmission and distribution
networks over five years
PLATIN
KNOCKUMBER
MULLINGAR
CLOON
RHODE
MAYNOOTH
THORNSBERRY
SHANNONBRIDGE
BLAKE
FERBANE
SOMERSET
GLASMORE
WOODLAND
ATHLONE
CASHLA
GALWAY
FINGLAS
GRANGE
NORTH WALL
RINAWADE POOLBEG
SHELLYBANKS
INCHICORE
CARRICKMINES
NEWBRIDGE KILTEEL
FASSAROE
DUNSTOWN POLLAPHUCA
DALLOW
TURLOUGH
HILL
PORTLAOISE
IKERRIN
ENNIS
CARLOW
TULLABRACK
MONEYPOINT
TARBERT
CASTLEFARM
ARDNACRUSHA
MUNGRET
MONETEEN
ARKLOW
THURLES
AHANE
KILLONAN
KILKENNY
AUGHINISH
CRANE
LIMERICK
RATHKEALE
TRIEN
CAHIR
TRALEE
SHELTON
ABBEY
KELLIS
DRUMLINE
PROSPECT
Northern Ireland system has a peak
demand of approx 1620MW
DUNDALK
SHANKILL
CARRICK-ONSHANNON
FLAGFORD
CASTLEBAR
AC Interconnector link with
Northern Ireland
–
LISDRUM
SLIGO
Irish system has a peak demand of
4415MW in 2003
KILROOT.
ANTRIM
NORTHERN
IRELAND
GOLAGH
MOY
Developed as an island system
–
COLERAINE
DOON
ANNER
CHARLEVILLE
WEXFORD
BALLYDINE
WATERFORD
GREAT ISLAND
BUTLERSTOWN
MALLOW
KNOCKEARAGH
BARRYMORE
DUNGARVAN
KNOCKRAHA
KILBARRY
MIDLETON
INNISCARRA
MACROOM
MARINA
TRABEG
AGHADA
CARRIGADROHID
RAFFEEN
BRINNY
BANDON
DUNMANWAY
NATIONAL GRID
Electricity Production since 1990
Taken from Generation Adequacy Report 2004-2010, www.eirgrid.com
NATIONAL GRID
Market Development
Directive
96/92/EC
of EU
Electricity
Regulation
Act, 1999
1996
Policy
Direction Department
of Public
Enterprise
1999
1999
Statutory
Instrument
No. 49 of
2000
CER’s
“Final
Proposals”
(CER/00/02)
2000
NATIONAL GRID
Wholesale
market
opening
19th
February
2000
Current Market Design
 Bilateral contract market with imbalance prices
– Top-up – regulated ex-ante price
– Spill – ex-post market price
 Constraints
– Day-ahead self-nomination process
– Payments by TSO for re-dispatch
 Capacity
– Availability payment
– Capacity related spill payment
 Renewables
– Green/Brown Mixing
– Monthly Tracking- margin of error of 5%
 Virtual Independent Power Producer (VIPP)
 Interconnector
– Long-term auction rights
NATIONAL GRID
Current Market Structure
IPPs
ESB - PG
95%
Bilateral
Trade
Congestion
Managemen
t
5%
Imbalances
Transmission
Distribution
ESB - PES
NATIONAL GRID
Regulated topup and spill
market
Bilateral
Contracts
New Participants
2004- 56% of
market open
9
2000- 28% of
market open
8
7
6
2002- 40% of
market open
5
4
3
2
1
0
1999
2000
2001
Number of Suppliers joining market
2002
2004
Number of Generators joining market
Full retail opening on 19th February 2005
NATIONAL GRID
2003
Price Setting for Apr-June 2004
700
679
600
542 538
500
468
400
353
300
249 245
190
200
165
145 134
99
100
83
78
65
62
58
57
51
43
30
27
DB1
TP1
0
TB3
MP3
AD1
PB3
MP2
PBC
PB2
MP1
MRT
GI3
AT1
AT4
PB1
NW5
AP5
AT2
GI2
99% of time spill price is set by single player
NATIONAL GRID
NW4
HNC
ED1
5
GI1
2
None
NATIONAL GRID
Year
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
MW
Increases in Wind Capacity
1000
900
800
700
600
500
400
300
200
100
0
Developments since 2000
 Market Rules changes
 Response to rises in Peak Demand
– Winter Peak Demand Reduction Scheme (WPDRS) – 80MW
 Interconnector
– Superpositioning on North-South Interconnector
– Proposed East-West Interconnector (2 x 500MW)
 Electricity Prices
– Increase of 40% to end user in the last 4 years
 Forecasted Capacity Shortage for 2005 onwards
– Peaking plant bought by ESB
– Competition for new generation led by regulator (150MW, 382MW)
NATIONAL GRID
Market Review 2003
 Highlighted issues
– Dominance (>90% in generation, 60% supply, monopoly in
transmission and distribution)
– Lack of liquidity and transparency in price
– Spill price 99% of time set by dominant player
– Constraints payments
 New Market Design proposed by regulator – ‘MAE’
– Locational Marginal Pricing with Financial Transmission
Rights
– No capacity payments
– Re-bidding up to real-time
– Self commitment
NATIONAL GRID
MAE – Under Review
 June 2004 - Decision to review MAE
ESBNG response to CER questionnaire - How would a Gross
Pool design work in Republic?
– Simple, single price, gross pool
– Unconstrained unit commitment
– Minimal change to existing systems
– Does not increase barriers to all-island market
 August 2004 – All-Island Context
– Policy statement by Ministers in Northern Ireland and Republic
– Memorandum of Agreement signed by Regulators
– Agreement to harmonise the trading arrangements
NATIONAL GRID
All-Island Energy Market
An all-island market should provide for a competitive,
sustainable and reliable markets in electricity and natural
gas on the Island of Ireland at minimum cost necessary.
All-Island Energy Development Framework, 21 June 2004

Joint consultation process on All Island Framework

ESBNG response:
– Development programme should:
– Include feasible timetable with key interim goals
– Contain a workable and efficient project implementation structure

Key priorities:
– Harmonise trading arrangements
– Connection policy & transmission tariffs
NATIONAL GRID
Summary
 Market has operated
– Structural issue remains
 Electricity price increases
– De-regulation has yet to deliver lower prices to end user
 All-Island Energy Market
– New context
– Harmonise RoI and NI trading arrangements
– Project implementation structure is crucial
NATIONAL GRID
New Capacity since 2000
800
700
600
500
MW 400
300
200
100
0
2000
2001
2002
Brown
NATIONAL GRID
Green
2003
CHP
2004 to date
Market Opening in 2004
100%
90%
80% 78%
70%
69%
62%
60%
56%
50%
40%
40%
38%
31%
30%
20% 22%
10%
0%
4
-0
un
-J
17
04
nJu
4
3-0
ay
-M
20
4
-0
ay
M
64
-0
pr
-A
22
4
r-0
Ap
84
-0
ar
-M
4
25
-0
ar
-M
4
11
-0
eb
-F
4
26
-0
eb
-F
4
12
-0
an
-J
29
4
-0
an
-J
15
04
nJa
1PES Demand
NATIONAL GRID
Independent Demand
Level of Market Opening
Market Opening in 2004
100%
90%
80%
70% 69%
62%
60%
56%
50%
40%
38%
30% 31%
20%
10%
0%
4
-0
ug
-A
19
04
gAu
5- 04
ul
-J
22
4
l- 0
Ju
8- -04
un
-J
24 -04
un
-J
10 - 04
ay
-M
27 - 04
ay
-M
13 0 4
pr
-A
29 0 4
pr
-A
15 4
r-0
Ap
1- - 04
ar
-M
18
4
-0
ar
M
4- - 04
eb
-F
19
PES Demand
Independent Demand
Level of Market Opening
Level of Market Opening increased from 40% to 56% on 19th February 2004
NATIONAL GRID