1. All Island Single Electricity Market IWFA Update Laura Brien
Commission for Energy Regulation
6th November 2014

2. Agenda I-SEM Context I-SEM Progress to Date
Concerns Raised during HLD consultation
The Aggregator of Last Resort
Balance Responsibility of Wind in other EU Markets

3. EU Context
Member States (UK and Ireland) have made a firm commitment to complete internal market
Third Energy Package
Establishment of ACER and ENTSOE as delivery bodies
Single market is being developed through ACER Framework Guidelines and ENTSOE Network Codes
European Commission take these through comitology process as binding Regulations
EC Review of State Aid Guidelines
Updated Guidelines which look specifically at generation adequacy measures published in 2014.

4. European Integration: Electricity Target Model
12h midday
As soon as possible after midday on D-1
On D
At H-1
capacity
Monthly
Day Ahead Market
Physical capacity used implicitly
Intraday market
Balancing mechanism
Y+3
Y+2
Annual (Y+1)
Forward Market (Physical/Financial)
time
Auctions of long-term FTRs and/or PTRs with UIOSI via a single platform
Flow-based or ATC-based pan-European price coupling
Continuous trading through a common platform or implicit auctions
Platform for exchanges between TSOs
Products exchangeable on a secondary market

5. Market Development Context
SOS
Competition
Environment

6. Specific Context of Wind in ISEM

7. I-SEM Progress
SEM Committee published I-SEM HLD Decision on 19th September
Compliance with Target Model
Efficient use of interconnectors
Incorporate lessons from the current SEM
Retention of a CRM, but compliant with state aid guidelines
Should aim to achieve a low cost efficient integration of renewables
Reduce curtailment
Incentivise the right back-up generation

8. Responses to HLD
HLD Consultation raised a number of concerns from wind industry;
Fundamental change from a ex-post pool to a ex-ante firm market
Obligation of Wind to be Balance Responsible
Risk associated with forecast errors
Capabilities of merchant wind farms
Treatment of Priority Dispatch status in ex-ante markets
Impact on wind revenues
Interaction with REFIT

9. Detailed Design Phase I-SEM Project Plan published on 10th October
Energy Trading Arrangements (ETA) process has commenced
Intensive input in next 12 months on the end to end workings of the market
Aggregator of Last Resort
1st Consultation in December 2014 (Framework)
2nd Consultation in April 2014 (Operation)
Final Decision in August 2015 in line with ETA decision
Industry involvement is key

10. Balance Responsibility of Wind in other EU Markets
The transition for wind to become balance responsible is not unique to Ireland
A number of MSs have implemented transitory measures
Denmark
‘BRP Club’ was opened for government supported (purchase obligation) wind that moved to market settlement arrangements
The Danish TSO is the Balance Responsible Party on behalf of portfolio
TSO sells the club’s portfolio into ex-ante markets, is balance responsible and settles the proceeds from these markets for participants
BRP club is ‘passive’ which created incentive for wind generators to move to a commercial BRP or set up own BRP independently
BRP Club is now closed to new members

11. Balance Responsibility of Wind in other EU Markets
Spain
Since introduction of forward markets in 1997, the Feed in Tariff for RES evolved to include incentives and obligations for participation in these markets
Units above 10MW mandated to provide wind forecasts. If error greater than 20%, a penalty is incurred (10% of estimated total average system cost)
In 2007, moved to Cap & Floor premium from the FiT. This was designed to be slightly more lucrative which encouraged generators to trade in all markets while exposing them to balancing costs
Aggregators also facilitated in market to minimise balancing costs

12. The Aggregator of Last Resort
Main Purpose of Aggregator of Last Resort (AOLR)
Provide a backstop route to market for wind generation
Minimise the risks associated with forecasting requirements in ex-ante market
ETA will still allow commercial aggregators enter market
Key Questions for December Consultation
The AOLR entity
AOLR Bidding & Settlement
Cost Allocation & Incentives
Participant Eligibility

13. END