Wind Power in Ireland: Treatment of wind in the Single Electricity Market

1. Wind Power in Ireland: Treatment of wind in the Single Electricity Market APEx Conference, Paris 16th October 2007

2. Presentation Overview Introduction: Wind Power in Ireland Single Electricity Market (SEM): Overview Treatment of Wind in SEM

3. Presentation Overview Introduction: Wind Power in Ireland Single Electricity Market (SEM): Overview Treatment of Wind in SEM

4. 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

5. Wind Power in Ireland to end 2007 1000 900MW 900 800 700 600 Installed Wind Power (MW) 500 400 300 200 100 0 1997 2000 1998 2002 1999 2001 2003 2004 1996 2005 2006 1994 1995 2007 1992 1993 Year

6. 15% 33% 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: Connected 803 MW Contracted 451 MW Offer Process 1344 MW In Queue 2923 MW Total: 5521 MW

7. 300 250 200 150 Installed Wind Power (MW) 100 50 0 1998 1999 2000 2001 2002 2003 2004 2005 1997 2008 2006 2007 1994 1995 1996 Year 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

8. Presentation Overview Introduction: Wind Power in Ireland Single Electricity Market (SEM): Overview Treatment of Wind in SEM

9. 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

10. Generator Unit Generator Unit Generator Unit TSO Dispatch Contracts for Differences Pool Wholesale Market Supplier Unit Supplier Unit Generators bid in energy Suppliers buy @ SMP Physical Contract Customer Customer Customer Mandatory Pool

11. Presentation Overview Introduction: Wind Power in Ireland Single Electricity Market (SEM): Overview Treatment of Wind in SEM

12. No Yes Autonomous Variable Choice between being a Price Maker or Price Taker Price Taker Price Taker Price Maker Wind in SEM: Classification Wind Grid Code Compliant?

13. 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

14. Receive additional costs incurred Pay back avoided costs 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 Dispatch Quantity Market Quantity Dispatch Quantity

15. 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

16. 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

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