Market Evolution in Ireland APEX 2004 Annual Conference

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Market Evolution in Ireland APEX 2004 Annual
Conference

• Ann Scully
• Manager, Market Operations
• ESB National Grid

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Irish Power System

• Developed as an island system
• Irish system has a peak demand of 4415MW in 2003
• AC Interconnector link with Northern Ireland
• Northern Ireland system has a peak demand of
  approx 1620MW
• 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

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Electricity Production since 1990
Taken from Generation Adequacy Report 2004-2010,
www.eirgrid.com
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Market Development
Directive 96/92/EC of EU
Wholesale market opening 19th February 2000
1996
1999
1999
2000
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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

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Current Market Structure
IPPs
ESB - PG
Regulated top-up and spill market
Congestion Management
95 Bilateral Trade 5 Imbalances
Bilateral Contracts
Transmission
Distribution
ESB - PES
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New Participants
2004- 56 of market open
2000- 28 of market open
2002- 40 of market open
Full retail opening on 19th February 2005
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Price Setting for Apr-June 2004
99 of time spill price is set by single player
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Increases in Wind Capacity
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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)

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Market Review 2003

• Highlighted issues
• Dominance (gt90 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

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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

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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

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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

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New Capacity since 2000
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Market Opening in 2004
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Market Opening in 2004

• Level of Market Opening increased from 40 to 56
  on 19th February 2004