Fortnightly sessions coming to Irish OTC electricity market
The all-island Irish over-the-counter (OTC)wholesale electricity market is set to move to fortnightly sessions in October.
The shift to fortnightly sessions comes two years after the first monthly, two-hour window went live for Ireland’s single electricity market (SEM) OTC market ( see EDEM 17 October 2011 ). The sessions are likely to take place on the 9 and 23 October, a source with knowledge of the process said.
A source at one of the companies normally trading on the market said the move to two sessions a month is due to an increase in liquidity and volume in 2013.
Data on broker Tullett Prebon’s website shows traded volumes reached over 300MW a few times this year, with the clip sizes sometimes increasing to 20MW from the usual 5MW. In the second half of 2013, traded volume was generally between 100-250MW each session, although in October 2012 it did go over 300MW.
While liquidity and volume is growing, a source with a counterparty said this was mostly down to the same companies becoming more active, rather than new ones entering the market.
The number of products on offer has also increased. Initially the front six months were available on Tullett Prebon’s screen, with quarterly products added as the market expanded. Contracts include baseload and peaks, as well as mid-merit, which runs from 07:00-23:00 Ireland time, and mid-merit 2, which runs from 07:00-19:00.
The all-island SEM is linked to the UK power market by two interconnectors – the 500MW East-West interconnector between Dublin and Wales and the 500MW Moyle interconnector linking Northern Ireland to Scotland. However, the Moyle cable is beset by difficulties and is operating at half capacity ( see EDEM 14 may 2013 ).
For most of the past two years the OTC market has existed the wholesale price of electricity in Ireland was far above that in the UK. But the introduction of the carbon floor price in the UK has slashed the premium ( see EDEM 9 May 2013 ).
The next OTC session takes place on 18 September. The SEM also operates a pool generation system. Power is sold through monthly auctions of non-directed contracts (NDCs). NDCs are a form of contracts for difference (CfD) used by Ireland’s SEM participants to hedge risk against its pool-based system. Tullett Prebon lists CfDs on its new screens. Fionn O’Raghallaigh
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