Single Electricity Market goes live
The electricity industry in Ireland is changing dramatically once again. From the 1st November an allisland wholesale electricity pool known as the Single Electricity Market (SEM) has come into operation. All electricity will be bought and sold through a pool at prices that are set by the market. The new wholesale trading arrangements are on an all-island basis and will provide an overall cost benefit to customers as well as promoting competition, improved coordination of transmission operation and environmental savings.
SONI and EirGrid have jointly established a Market Operator who is responsible for operating the SEM. Generators compete to be dispatched on the basis of bids that they submit to the Market Operator. A single wholesale price for electricity is determined for each half-hour of every day and is paid to generators north and south for the energy that they produce. This leads to variations in the wholesale price of electricity over the day and over different seasons.
ESB welcomes the start of this new era and particularly acknowledges that successful implementation was due in the first instance to the commitment of the governments of Ireland and of the United Kingdom and of the government departments North and South. ESB also acknowledges the commitment of the Regulatory Authorities (the CER and NIAUR) to ensuring the involvement of industry participants and their determination to overcome all obstacles so that the SEM could go live on the 1st of November. ESB has supported the establishment of an all-island market and has worked closely with the Regulatory Authorities (North and South) and with other participants in the development and implementation of the SEM.
The introduction of the SEM presents new challenges and opportunities and ESB has completed a major project to ensure that its businesses are able to compete successfully in the new market. ESB's AIM Programme delivered ESB's Pool Market Operations system as well as major IT and business change projects across ESB.
The Pool Market Operations system provides an automated interface for ESBI, ESBCS and Power Generation with the Market Operators systems for:
- Supplier and Generator Setup and Registration
- Bid Management and Offer Submission
- Market Data Capture
- Generator Data Validation
- Generator and Supplier Energy and Capacity Settlement
- Supplier Credit Cover Monitoring and forecasting
ESBCS has adopted a new organisational structure for trading operations.
The introduction of the all island pool market provided a step change for ESBPG. The termination of PG's highly regulated Bulk Power Agreement with ESBCS has heralded a new era of lighter regulation and commercial freedom for ESB Power Generation.
PG's successfully implemented of strands; organisational realignment; a new trading strategy, the execution of power, fuel and currency derivative trades; the implementation of a newly developed bidding strategy; an enhanced risk management structure and the counterparty credit management and settlement associated with all of those activities.
ESBI has also undergone significant restructuring in preparation for the SEM. The new market requires new capabilities to operate as both a Generator and Supplier. Over the past 18 months ESBI has established an Independent Generation (ESBIg) business responsible for ESB's independent power plants.
Along with ESBIg, Coolkeeragh, Synergen, Hibernian Wind and ESBIe also operate under the umbrella of ESBI. ESBIg has developed its business processes and organisational structures in line with best. ESBI looks forward to participating in the new market viewing it as an opportunity and a platform for the growth of their business.
