I-SEM ETA Building Blocks Consultation Paper

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1 I-SEM ETA Building Blocks Consultation Paper Laura Brien CER IWFA Conference, 5 th March 2015

Detailed Design Phase I- SEM Project Plan published on 10th October Energy Trading Arrangements (ETA) process has commenced ConsultaDon Paper on Aggregator of

2 Detailed Design Phase I- SEM Project Plan published on 10th October Energy Trading Arrangements (ETA) process has commenced ConsultaDon Paper on Aggregator of Last Resort published ConsultaDon Paper on ETA Building Blocks published Markets ConsultaDon paper due April Number of work- streams will kick off in coming months 2

4 Topics Covered in Markets Consultation Treatment of Transmission Losses Treatment of Constraints Treatment of Firm Access Treatment of Priority Dispatch Treatment of Curtailment I- SEM De Minimis Level Policy for Currency in I- SEM Market InformaDon in I- SEM

5 Treatment of Transmission Losses Treatment of losses in SEM TLAFs set ex- ante Applied by all Generator and Interconnector users to their Commercial Offer Data (COD) SeRlement is on Loss- Adjusted MSQ TLAFs for suppliers set to 1 Any difference between ex- ante forecast losses and actual losses recovered from suppliers through global aggregadon

6 Treatment of Transmission Losses Trading Boundary = 98MW (demand quandty) COD = 50 /MWh Suppliers (TLAF = 1) G1 (TLAF = 0.98) StaDon Gate = 100MW produced by generator Cost = 49 /MWh

7 Treatment of Transmission Losses Proposals for I- SEM Traded volumes in DAM and IDM at trading boundary (net of losses) so losses accounted for in their offers (volume and price) Physical nodficadons to the TSO at stadon gate (before losses) Metered generadon adjusted by individual TLAF in serlement OpDon Measure balancing acdons at either stadon gate or trading boundary for consideradon

Treatment of Transmission Losses Treatment of

Only one boundary between bidding areas in

6%) could apply to the ICs each line could be

I- SEM GB Price DifferenDal Aggregate Loss Factor

8 Treatment of Transmission Losses Treatment of Interconnectors Losses on EWIC 6% and Moyle 2% Only one boundary between bidding areas in EUPHEMIA Or A weighted average loss factor (4.6%) could apply to the ICs each line could be represented separately by introducing dummy areas I- SEM GB Price DifferenDal Aggregate Loss Factor Moyle Flow EWIC Flow 1% 3% 5% 7% Two Factors Loss Moyle Flow EWIC Flow

9 Constraints Treatment in SEM Unconstrained Market Schedule If constrained down, unit keeps its inframarginal rent Earns market revenue and pays back its offer price (SRMC) If constrained up, unit receives its offer price (SRMC)

10 HLD: Constraints Proposals for I-SEM Energy acdons will receive marginal balancing energy price Non- energy acdons will receive their offer price (their offer price being their Inc or Dec to the BM as opposed to offers in DAM/IDM) Proposal: If constrained up, unit will receive the higher of its BM incremental offer price or the BM clearing price If constrained down, unit will pay back lower of its decremental bid price or the BM clearing price N.B. EnDtlement to inframarginal rent is condngent on achieving an ex- ante posidon

11 Constraints Examples Unit sells 100MWh in DAM in hour X. The clearing price in the DAM is 50 /MWh. Unit s TLAF is assumed to be 1 for simplicity in these examples. Example a) Assume: Non- Energy acdon The unit s decremental bid price into the BM is 35/MWh. The unit is dispatched at 80MWh. The BM price is 40/MWh. Total Revenue = 50/MWh*100MWh + 35/MWh *(80MWh - 100MWh) = 50/MWh*100MWh + 35/MWh *(- 20MWh) = = 4300 Example b) Assume: Non- Energy acdon The unit s decremental bid price into the BM is 35/MWh. The unit is dispatched at 80MWh. The BM price is 30/MWh. Total Revenue = 50/MWh*100MWh + 30/MWh *(80MWh - 100MWh) = 50/MWh*100MWh + 30/MWh *(- 20MWh) = = 4400 The accepted non- energy acdon pays back the lower of the BM price and the bid price.

12 Treatment in SEM Treatment of Firm Access Firm Access endtles a generator to deliver energy up to a set MW level. If constrained down below this they receive compensadon Non- firm Access only allows access to the grid up to a set MW level where technically feasible If unit is not dispatched into its non- firm region there is no endtlement to inframarginal rents OpDons for I- SEM Firm Access does not affect DAM and IDM pardcipadon OpDon for serlement where non- firm volume is constrained down Cashed out at imbalance price

13 Treatment of Priority Dispatch Priority dispatch: obligadon on TSOs to dispatch energy from certain generators ahead of other generators as far as secure operadon of the electricity system permits Treatment in SEM In the Trading & SeRlement Code generators must register as price takers to get priority dispatch status Priority Dispatch plant receive SMP (set by price making generadon)

14 Treatment of Priority Dispatch - ISEM Day Ahead Market units with priority dispatch can submit proxy price taker bids taking any price between PCAP (3000 /MWh) and PFLOOR (- 500 /MWh) Intraday Market condnuous market all units seeking to match the highest available buy price no priority when it comes to achieving a trade OpDons for Price taking in the Balancing Market PD units offering into the BM at a nodonal price floor PD units offering into the BM at zero price An explicit price taking mechanism that doesn t rely on an offer price

15 Treatment of Priority Dispatch Proposals for I- SEM A Priority Dispatch plant wishing to become price maker for part of its output could submit a physical nodficadon, based on their expected output, to the TSO which would have Priority Dispatch status; and submit Incs and Decs reflecdng the price at which it is willing to deviate from its physical nodficadon ConsideraDon should be given to the Dec price below which priority dispatch should not be accommodated e.g. a demand unit may have a large negadve Dec price that the TSO could use to accommodate an extra 1 MW of RES (demand unit would be paid to increase demand)

16 Treatment of Curtailment Currently no disdncdon between constraints and curtailment in terms of serlement to pardcipants SEM CommiRee clarified the issue in SEM Curtailment will be applied pro- rata on all wind generadon in the market; The TSOs will apply a rule set for disdnguishing between constraints and curtailment; and From 2018 onwards, wind generadon will not be compensated when it is curtailed.

17 Treatment of Curtailment QuesDons for I- SEM Curtailment of DAM and IDM traded volumes What if Ex- Ante revenues are higher than cash out price? Methodology needed to claw back DAM and IDM revenues Mandated bidding behavior Difficult for generadon and monitoring authorides ReconciliaDon and post processing Needs access to all market revenues

18 Curtailment Example OpDon 1) Unit sells 100MWh in DAM in hour X. The clearing price in the DAM is 50 / MWh. Unit s TLAF is assumed to be 1 for simplicity in these examples. Curtailment occurs and the unit s output is reduced to 80MWh. The clearing price in the BM is 40 / MWh. Post Treatment, i.e. plant not compensated for curtailment. Wind generators bid a decremental price into the Balancing Market based on their revenues from the ex- ante markets Total Revenue = 50/MWh*100MWh + 50/MWh*(80MWh- 100MWh) = 50/MWh*100MWh + 50/MWh*(- 20MWh) = = 4000 OpDon 2) The posidon is cashed out at the Imbalance price and there is a reconciliadon process Total Revenue = 50/MWh*100MWh + 40/MWh*(80MWh- 100MWh) = 50/MWh*100MWh + 40/MWh*(- 20MWh) = = 4200 And there is a reconciliadon process by which the curtailed generator pays back 200

19 QuesDons for I- SEM Treatment of Curtailment Should there be a disdncdon made between Ex- ante trades (in DAM and IDM) versus output in the BM and imbalance serlement? Clawing back DAM and IDM trades may act as a disincendve to trade in these markets could be significant with the levels of wind expected could increase DAM price but potendally higher DAM price needs to be weighed against potendal compensadon amounts

20 Other Issues No changes to De- Minimis level proposed in consultadon paper: De- Minimis level of 10MW Maintain Dual Currency and socialise cost Invoice as a single line item on all suppliers Levy on all suppliers (similar to DBCs) Data publicadon condnue current levels of data publicadon TSOs demand forecast Greater informadon from TSOs wind forecast Market nodce board with generator outages highlighted? REMIT and MAD II requirements

21 Treatment of Transmission Losses Treatment of Constraints Treatment of Firm Access Treatment of Priority Dispatch Treatment of Curtailment I- SEM De Minimis Level Policy for Currency in I- SEM Market InformaDon in I- SEM Discussion

I-SEM Interconnector Losses. Information Paper

I-SEM Interconnector Losses. Information Paper I-SEM Interconnector Losses Information Paper 2 nd June 2017 Introduction The Trading and Settlement Code requires the TSOs, EirGrid and SONI, to calculate Transmission Loss Adjustment Factors (TLAFs)