wind power in ireland: treatment of wind in the single electricity market

Wind Power in Ireland:

Treatment of wind in the Single Electricity Market

APEx Conference, Paris

16th October 2007

Presentation Overview

Introduction: Wind Power in Ireland

Single Electricity Market (SEM): Overview

Treatment of Wind in SEM

Presentation Overview

Introduction: Wind Power in Ireland

Single Electricity Market (SEM): Overview

Treatment of Wind in SEM

Introduction: Wind Power in Ireland

Ireland Power System:– Approximately 6500 MW

generation installed (excluding wind)

– Peak demand: 5035 MW

– Minimum demand: 1814 MW

– 803 MW Wind Power installed at present

– Wind Grid Code

– Priority Dispatch

Wind Power in Ireland to end 2007

900MW

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Wind Power in Ireland: Future…

Government Targets for Renewable Energy:

– 15% of electricity from renewable resources by 2010

• approximately 1160 MW of wind required

– 33% of electricity from renewable resources by 2020

• in the region of 4600 MW of wind required

• Ireland well placed to meet these targets:

15%

33%

Connected 803 MWContracted 451 MWOffer Process 1344 MWIn Queue 2923 MWTotal: 5521 MW

Introduction: Wind Power in Northern Ireland

Northern Ireland Power System – Operated by SONI (Systems Operator for Northern Ireland)

– 2132 MW generation installed (excluding wind and interconnection)

– Peak demand: 1717 MW

– Minimum demand: 561 MW

– 120 MW wind installed and an additional 138 MW approved

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Presentation Overview

Introduction: Wind Power in Ireland

Single Electricity Market (SEM): Overview

Treatment of Wind in SEM

Single Electricity Market (SEM): Overview

• Single Electricity Market: Joint market for both Ireland and Northern Ireland

• Dual Currency

• Market Start: 1st November 2007

• Mandatory pool with single clearing price– All energy must be sold directly into and bought from the pool

– Separate physical energy trades are not permitted

– De minimis level of 10 MW

• Separate Capacity payment mechanism

• Specific rules for “special” participants

WholesaleMarket

Physical Contract

Customer CustomerCustomer

Suppliers buy @ SMP

Supplier Unit

Supplier Unit

Generator Unit

Generator Unit

Generator Unit

Generators bid in energy

Pool

TSODispatch

Contractsfor

Differences

Mandatory Pool

Presentation Overview

Introduction: Wind Power in Ireland

Single Electricity Market (SEM): Overview

Treatment of Wind in SEM

Wind in SEM: Classification

Wind Grid CodeCompliant?

Choice between being aPrice Maker or Price Taker

Price Maker Price Taker Price Taker

Variable

Yes

Autonomous

No

Wind in SEM: Energy Payments

• Price Takers

– If wind blowing and wind power unit produces energy, it will receive single clearing price, SMP (System Marginal Price) for all energy produced

• Price Makers

– Scheduled by the market software based on the prices the wind power unit offers into the market.

– Will receive SMP for scheduled energy

Wind in SEM: Constraint Payments

• Price Taker– If dispatched down by TSO, each Price Taker wind power unit

will still receive payment in full for what could have been produced

• Price Maker– Always receive full energy payment for market schedule

amount– If dispatched down: pay back avoided costs for difference– If dispatched up: receive costs incurred for difference

MarketQuantity Dispatch

Quantity

Pay back avoided costsDispatchQuantity

Receive additional costs incurred

Wind in SEM: Capacity Payments• Incentive to provide capacity adequacy through economic

signals

• Paid to all generators who provide capacity

• Based on a combination of• Forecasted value of when capacity most needed• Actual availability on the day

• Higher payments in times of small generation margins

• In current market in Ireland: no capacity payment for wind

• In SEM, all wind power units will receive a payment for available active power

Summary: Wind Power in Ireland

• Increasing wind power in Ireland

• Priority Dispatch

• Price taker wind receives SMP for energy produced

• Price maker wind receives SMP for market scheduled energy

• All wind power units will receive capacity payments

Thank youThank you

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