SEM experience to date and the impacts for the future

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SEM experience to date and the impacts for the future
SEM experience to date and
the impacts for the future
Sean McGoldrick, General Manager SEMO
SEM Overview
Mandatory Pool
 All energy sold into and
bought from the pool
 Typically 48 Trading Periods
(30 mins) per Trading Day
 Separate physical energy
trades are not permitted
Timeframes
Operating Time
Frame (TSOs)
Indicative
Running
Schedule
16:00 D-1
Dispatch
Real Time
Meter
Data
Uninstructed Imbalances
Bids
10:00 D-1
Gate
closure
Market Time
Frame (SEMO)
Constraint Payments
Indicative
Market
Schedule
12:00 D-1
Ex-Post
Unconstrained
Schedule
(EPUS)
16.00 D+1,
17.00 D+4
Energy
Payments
Electricity Market High Level Overview
D-2
D-1
Follow
Control
Instructions
SEMO
TSO
Meter
MP
Submit
Bid
Offers
D
Publish
Forecasts
D+1
D+4
Weekly
Financially
Settle
Position
Review
Position
Provide
available
Meter Data
Provide final
Meter Data
Indicative
Collect
Schedules,
Real Time
Prices and
Data
Settlement
Initial Daily
Schedules,
Prices and
Settlement
Run
System
Real Time
Produce
Indicative
Schedule
and Price
Invoice
Weekly
Position
Participants in the SEM
 45 Participants have registered in SEM
 31 Participants have registered Generator
Units
 10 Participants have registered
Interconnector Units
 Registered Capacity in the Market: 9856 MW
Predictable Price
Maker:
8567 MW
Variable Price Maker:
None
Predictable Price
Taker:
346 MW (All Peat)
Variable Price Taker:
157 MW (All wind)
Autonomous:
786 MW
781 MW wind
5 MW of biomass landfill gas
generation
Some Participants
Airtricity Energy Supply NI Ltd
GU + SU
Mountain Lodge
GU
Airtricity Ltd
GU + SU
Moyle Energy Holdings
IU
Arklow Energy Ltd
GU
Muinngnaminine Windfarms Ltd
GU
Aughinish Alumina Ltd
GU + SU
NIE Power Procurement Business
GU
Ballywater Wind Farms
GU
NIE Supply
SU
Bord Gais Eireann
SU
Premier Power Ltd
GU
Bordnamona Energy Ltd
GU
Quinn Energy Supply Ltd
SU
CHP Supply Ltd
SU
Quinn Windfarms Ltd
GU
Coolkeeragh ESB Ltd
GU
Saorgus Energy Ltd
GU
ESB Customer Supply
GU + SU
Sorne Wind Ltd
GU
ESB Independent Energy NI
GU + SU
SSE (Ireland) Limited
IU
ESB Independent Energy ROI
SU
Synergen Power
GU
ESB Power Generation
GU + SU
Tursillagh 2 Windfarms Ltd
GU
First Electric Ltd
GU
Tynagh Energy Limited
GU
Hibernian Wind Power Ltd
GU
Vayu Ltd
SU
Highland Wind Energy
GU
Viridian Energy Limited
SU
Huntstown Power Company Ltd
GU
Viridian Energy Supply Ltd
GU + SU
Interconnector Administrator SONI
N/A
Viridian Power Limited
GU
Mantlin Ltd
GU
Waterpower Engineering Ltd
SU
Market Share Trend –
Generators
Airtricity Energy Supply NI Ltd Generation
700000
Airtricity Ltd Generation
Arklow Energy Ltd
Aughinish Alumina Ltd
600000
Ballywater Windfarms Ltd
Bord Gais Interconnector
Coolkeeragh ESB Ltd. Generator
Edenderry Power Ltd.
500000
ESB AER
ESB Independent Energy NI Interconnector
ESB PGEN
400000
First Electric Ltd
Hibernian Wind Power Ltd
Huntstown Power Company Ltd
300000
Knockawarriga Windfarms Limited
Mantlin Limited
Mountain Lodge Limited
200000
Muingnaminnane Windfarm Limited
NIE Energy (PPB)
NIE Energy (Supply) Generation
Premier Power Limited
100000
Snugborough Windfarm RoI Limited
Sorne Wind Limited
SSE (Ireland) Ltd.
2007
-100000
2008
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51
50
0
Synergen
Tursillagh 2 Ltd
Tursillagh Windfarms Ltd
Tynagh Energy Limited
Viridian Energy Limited
Viridian Energy Supply Ltd
Market Share Trend –
Suppliers
350000
300000
Airtricity Energy Supply NI Limited
Airtricity Ltd Supply
Aughinish Alumina Ltd
250000
Bord Gais NI
Bord Gais ROI
CHP Supply Ltd.
Dan Twomey Waterpower Engineering Ltd.
200000
ESB CUSTOMER SUPPLY _PES
ESB Customer Supply ASU
ESB Independent Energy NI Supply
150000
ESB Independent Energy ROI Supply
ESB PGEN Supply
NIE Energy (Supply)
Quinn Supply Limited
100000
Quinn Windfarm Limited
Viridian Energy Limited
Viridian Energy Supply Ltd
50000
45
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50
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52
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0
2007
2008
SEM Financial
Cashflow
Generator Unit in SEM
 Energy Payments:
- Paid System Marginal Price (SMP) for energy scheduled by the market in each half hour
- Settled on a weekly basis
 Capacity payments:
- Paid for available capacity in each half hour
- Settled on a monthly basis
 Other payments
- Constraint payments (+/-) If TSO dispatch differs from market schedule
- Uninstructed imbalances (+/-) If metered generation doesn’t correspond to dispatched output
- Make Whole Payments (+) If costs incurred are not recovered through other market payments
- All settled on a weekly basis
 Other charges
- Currency Charges (Weekly & Monthly)
- Market Operator charges (Weekly – variable, Monthly – fixed)
- Unsecured Bad Debt charges
- Generator Under test charges
Cashflow
Supplier Unit in SEM
 Energy Charges:
- Pay System Marginal Price (SMP) for energy consumed (MWh) in each half hour
- Settled on a weekly basis
 Capacity Charges:
- Charge based on consumption of energy (MWh) in each half hour
- Used to pay Generator Units for capacity
- Settled on a monthly basis
 Other charges:
- Imperfections charges: Charge per MWh of energy consumed
- Currency Charges
- Market Operator charges
System Marginal Price by Trading Period
January
2008 to
System M arginal Price by
Trading Period
01 Jan 2008 to 31st Aug 2008
August 2008
600
500
€/MWh
400
300
200
100
0
1 2 3
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
Trading Period
Mean + 1σ
Mean - 1σ
Max SMP
Mean SMP
Min SMP
Tightly Banded!
Financial Summary
 SEMO will process Energy Payments of approximately €4/£3 Billion annually
 A further €600/£461 Million in Capacity Payments annually
 The market remains fully collateralised
 It holds collateral, in the form of Letters of Credit and Cash deposits, from supply
companies of approximately €320/£246 Million
 It prices the market and processes payments in two currencies (Euro and Sterling)
 To date SEMO has processed over €800/£615 Million in payments
- 800 Million in, 800 Million out, with 1 day turnaround between
 SEMO’s annual operating cost, including depreciation, is €25/£19.2 Million
SEM IT
IT Systems
 The SEMO IT systems provide a modern, open, e-business, n-tier platform
architecture to provide maximum scalability, availability, resilience, performance,
reliability and stability to enable mission critical operations for the SEM
 The key components of the solution are:
- Market Interface System provides the interfaces for information exchange with the SEM systems – i.e.
interaction with Market Participants, Meter Data Providers, and System Operators
- Market Applications System that provides the scheduling and pricing mechanisms
- Market Settlement System that provides the meter data management, settlement, and billing and
invoicing functions
- Finance System that provides financial processing capabilities including credit management and
electronic funds transfer
IT Systems
 The SEMO corporate and market systems consist of approximately 120 servers
across two sites (Belfast & Dublin).
 There are also a large number of applications, backup devices, storage devices,
communications equipment and other peripheral equipment.
 The systems are fully redundant across two separate locations connected by 2 high
speed dedicated links.
 The systems can be run entirely at either location or a mix of both locations.
 The main systems were delivered by 3 independent vendors with in excess of 30
smaller vendors supplying hardware, software and other systems.
IT Capabilities
SEMO Website
SEM Future
Development potential
 Financial Market
 Future interconnectors planned
- Physical trading remains the same
- Regulated: EirGrid 2012
- Players CFDs outside pool
- Merchant: Imera 2011
- Currently, there are Directed Contracts
and Non-Directed Contracts
- Both aim to be commissioned by 2012
- Greater liquidity required
 SEM lightly interconnected to
BETTA
 Moyle HVDC 500MW Import
80MW Export…technically
capable of 500MW export
 Explicit Auctions
- Moyle and EirGrid short and medium
term
- Imera long term
Expansion/Integration:
Options
 A. Unified Pan-European solution: employing a centrally legislated and harmonised
approach. Significant change from the present approaches.
 B. Horizontal Integration: Market regions progressively merge, developing and sharing
more efficient coupling mechanisms and leading to fewer, larger market regions.
 C. ‘Dome’ Coupling: where a central entity or function is created to determine efficient
flows between the coupled market regions (that each utilise their own mechanisms to
resolve inter-regional flows and market prices).
 7 Regions
- France, UK, Ireland
- SEM has linked NI and ROI
- Integration with UK and France?
SEM/BETTA Comparison
SEM
Gross Mandatory Pool
BETTA
Bilateral Market
-For energy; capacity payments mechanism
-With central balancing mechanism and
settlement for imbalances
-Anticipated development of CFDs, etc.
Gate Closure: Day ahead
Gate Closure: One hour ahead
Central Dispatch – Merit Order
Self-Dispatch
Explicit Capacity Payment
Mechanism
No Capacity Payment Mechanism
Ex-Post System Marginal Price
Separate System Buy Price (paid by
participants who are “short”) and System Sell
Price (paid by those who are “long”) for each half
(for every half hour)
hour
SEM/BETTA Comparison cont.
SEM
BETTA
No central notification of bilateral
contracts
Bilateral volume contracts for each
half hour notified up to 1 hour ahead
Dual currencies - €/£
Single currency - £
Currency exchange costs socialised
Settlement and Invoicing
Settlement and Invoicing
-Weekly billing periods
-Each settlement day
-Payment due 10 days after invoice
-Payment due 29 days after invoice
-Capacity settled on monthly basis
Credit Policy: aims for full collateral
cover of known and forecast liabilities
Credit Policy: aims for full collateral
cover of known and assessed liabilities
SEM/BETTA Comparison cont.
SEM
BETTA
GOVERNANCE
SEM Committee (Regulatory Authorities
and two independent members)
Independent Panel: key role in decision
making and proposals to regulator
Rules in published code (TSC)
Rules in published code (BSC);
overseen by Independent Panel
Market Operator (SEMO)
Market Operator (ELEXON)
-Joint venture between two system operators
-Independent subsidiary of system operator
-Managed by Independent Board
Change Process
Change Process
-Defined in TSC; final authority on modification
proposals lies with the Regulatory Authorities
-Defined in BSC; final authority on modification
proposals lies with regulator
OPERATIONAL
SEMO uses agents to develop systems,
but operates them itself
ELEXON makes use of agents that
develop and operate systems
Future of SEM
 Greater Coupling with BETTA
- Facilitates larger/faster penetration of renewable energy in both markets
 Integration and creation of an All Islands/Regional Market
 Return to a Bilateral Market?
- Market share of incumbents reduced
- Less transparent
- Greater Competition in retail and wholesale markets?
- Both Generation and Supply arms in energy companies
 Extension of Gross Mandatory Pool?
- Significantly increased collateral requirement
Summary
SEM Experience to Date
 The market has been launched on time and within budget
 The Market has operated successfully in its first 11 months
 A number of major software releases have been successfully put into production
without interfering with the market schedule
 13 new participants have joined the SEM since market launch
 Market Development continues (Over 150 Modifications considered since market
launch, single design authority, redesigned website, market system development
plan in place)
Further Details
Thank You
Questions Welcome
For further details on the Single Electricity Market please see:
www.sem-o.com

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