Irish Market Experiences High Levels of Negative Pricing

Since the introduction of the I-SEM in October 2018, Ireland has experienced a high level of negative pricing compared to other European markets. Prices dropped as low as minus €139.44 in February. Negative pricing occurs during periods of very high wind, mostly at night, when it becomes too expensive for power stations to switch off and then back on again when wind energy is low.

In such circumstances, it becomes cheaper for the power station to pay energy suppliers to take their power. It would be a bit like walking into a shop and seeing a negative price on a box of cereal i.e. they are paying customers to take their product.

Negative pricing is a new development in the Irish electricity market, but it is symptomatic of a problem that presumably has been happening for many years. If power stations are unable to switch off during periods of high wind then that means the co2 savings attributable to wind are much less than is often claimed.

In effect, it means we are running a duplicate system, with wind and fossil fuel /other renewables running in parallel with each other.

Power stations affected by negative pricing include other renewables such as biomass and waste to energy which are increasingly having to waste their output to facilitate more wind.

Appeal Panel Rule in Favor of Huntstown Power Station

An Appeal Panel appointed by the Department of Communications has determined that the Energy Regulator (CRU) erred in making changes to the licence of Huntstown gas powered station following the power station's failure to secure capacity payments in the recent capacity auction. The Regulator's decision would have forced the power station to give three years notice of closure, which meant the plant would have had to run at a loss for those years. 

"The CRU has effectively turned up the heat and locked the door of the kitchen.” - Appeal Panel decision

 The Appeal Panel was made up of three barristers - Eilis Brennan BL, Joe Jeffers BL and Aoife Carroll BL. They ruled that the Regulator had made a “serious and significant error (by omission)” by not reaching a negotiated settlement to help manage the power station's exit from the market through a Targeted Contracting Mechanism (TCM). In a further blow to the already delayed I-SEM, the Regulator had failed to include a TCM in it's setup.

It's uncertain as to the consequences of this ruling and whether it will actually be implemented at all. However, it does highlight the urgent need for some independent oversight in Ireland.

I wrote previously about the capacity auction here.

Delay in New All Island Electricity Market Raises Questions over Future of Power Stations

The new All Island Electricity Market (I-SEM) was set to come into operation in May this year but has now been delayed by six months. This raises questions over what will happen to two power stations set to close this year. Both Huntstown CCGT in Dublin and Kilroot in Northern Ireland failed to secure capacity payments in the recent I-SEM auctions and signaled their intention to close down by the end of May. This would be disastrous for both Dublin and in particular Northern Ireland, which, with no replacement generation ready, would face the prospect of prolonged blackouts for the next year at least. With all the focus being placed on renewables and battery storage, there still has been no proper impact assessment (nor media coverage), now needed more urgently than ever, on how the Irish grid will cope without these power stations.

The blame for the delay in the I-SEM has been put down to software problems. Which is something this blog highlighted a few years ago - the increased administration costs and problems that could arise from the increased complexity of operating a grid designed around wind energy.