Ireland and Northern Ireland

The Challenge

The Commission for Energy Regulation (CER) and the Northern Ireland Authority for Utility Regulation (NIAUR) (jointly the Regulatory Authorities (RAs)) needed to develop new market structures to comply with the EU Third Energy Package. This would involve modifying the all-island Single Electricity Market (SEM) they had jointly created into the Integrated Single Electricity Market (I-SEM). The aim was to implement the I-SEM in 2017 but in order to do so the RAs required advice on the appropriate procurement and remuneration of system services, as part of the DS3 (“Delivering a Secure and Sustainable Electricity System”) Programme, which had been initiated by the Transmission System Operators (TSOs) and supported by the RAs. IPA provided the economic analysis of available options to inform the SEM Committee’s decision.

Our Solution

To provide the required consultancy services IPA undertook economic, financial and technical analysis to support supply side analysis and economic appraisal of the requirement for additional system services (sometimes called ancillary services). This involved:

  • A review of demand side analysis – including assisting with reviewing and interpreting the results of demand side modelling carried out by the TSOs (the modelling was carried out using assumptions and scenarios agreed by the RAs);
  • A supply side analysis – including assessing the previous System Services Review and carrying out additional financial analysis to determine the costs of the “supply” curve for system services; and
  • An analysis on the options for procurement mechanisms – including assistance with determining the appropriate framework for procuring system services and advising on these options in light of the demand and supply side analyses.

A Final Report outlining IPA’s key findings and recommendations was published on the All-Island website.