SEM Chart of the Week
Let’s Start the New Year Right – The best of 2019
As the year draws to an end and we trade policy papers for gift wrap, colleagues for family and coffee for mulled wine, tis’ the season to take a moment and reflect on the topics of 2019 that have garnered the most interest from our complimentary Chart of the Week publication.
Our popular weekly publications are an opportunity for our team to provide insight on the latest industry news. Based on download data, these are the top five most popular Charts of the Week from 2019
5. Good thing: 70% renewables and the looming shortfall (5 April)
In June, the government announced that Ireland will no longer lag the rest of Europe when it comes to climate action. The announcement that 70% of electricity generated would come from renewables by 2030 was welcomed by many.
‘It’s a great ambition but how realistic is it?’ In this Chart of the Week we looked at routes to market for renewable assets required to meet the 2030 target.
Addendum: we looked at the RESS auction design in our recent Chart of the Week following the information released in November’s stakeholder briefing.
4. Go with the flow: Estimating Celtic Interconnector use (7 June)
With the increasing penetration of renewable generation across Europe, discussion of the viability and benefits of interconnectors is also rising. In Ireland, just one interconnector is currently in operation (excluding north-south tie lines): the East West interconnector (EWIC) to the GB market. There are two further interconnectors with Project of Common Interest (PCI) status: the Greenlink Interconnector to GB, and a link further afield to France – the Celtic Interconnector.
This Chart of the Week considered the likely flows between Ireland and France over the proposed interconnector.
The Celtic Interconnector will form a key component of Ireland’s pursuit of 70% RES-E by 2030, facilitating the transfer of excess electricity between the Irish and French grids. Eirgrid and RTE recently secured €530 mn in EU funding to build the interconnector paving the way for this project to go ahead.
3. A delicate truth: comparing electricity prices in Europe (3 May)
The Joint Committee on Climate Action (JCCA) recommended a legally binding renewable electricity target by 2030, with State-built grid connections to accommodate this. Implementation of such initiatives into policy has, in other countries, added to the final electricity bill for domestic consumers. For households in Ireland, electricity rates already sit higher than those in the UK and France.
In this Chart of the Week we discussed the potential impact of the recommendations from the Committee on household electricity bills.
Ireland’s domestic electricity bills are among the most expensive in Europe, the Government’s 70% RES-E target which was presented in the Climate Action Plan is likely to result in consumers subsidising renewables build out, adding to their final bills.
2. Under pressure: Price cannibalisation in the SEM (13 September)
After the publication of Project Ireland 2040 and Climate Action Plan 2019, it looks increasingly likely that renewables will be a significantly larger proportion of the generation mix. The Climate Action Plan has and will increasingly see renewable projects look to the wholesale power market to underpin investment, a complicating factor of this will be price cannibalisation.
With the one-year anniversary of I-SEM passing, this Chart of the Week looked back at the power market throughout 2019 to observe the potential impacts of price cannibalisation in the SEM, along with identifying additional causes.
The new SEM has seen lower average day ahead prices in its first year, due to increasing wind output and supressed NBP gas prices. The upcoming RESS will assist in continuing this trend.
1. Coming in hot: Final T-4 CRM results published
On 7 May, the System Operators released the final results of the 2022-23 T-4 capacity auction, setting out the winners of agreements. While previous T-1 auctions are not comparable, the System Operators were satisfied that prices between the auction had been stable. The clearing price was €46,150/MW, for a total cost of €342mn.
As we noted in our Chart of the Week ‘There is a Light That Never Goes Out’, this is an important auction in signalling what capacity will seek to connect to the networks over a period of significant close-down of thermal assets: 1.6GW is expected to leave the system within five years.
As older generation units exit the system, flexible solutions are being procured by the system operators to fill the void and to provide support for Ireland’s increasing renewables penetration.