Irish power market to offer UK summer flexibility

Christopher Somers

30-May-2017

Forward electricity prices indicate that power is likely to flow from the Irish market to the UK during the coming summer months, with UK contracts currently holding a comfortable premium over Irish equivalents.

This stands in contrast to previous years, when the Irish single electricity market (SEM) has traditionally been more expensive than the UK during the summer.

Net flows from Ireland could be valuable for the UK during the hottest months of the year, especially on low-wind days when system margins can come under pressure from increased air-conditioning consumption.

The Irish July ’17 Baseload contract last changed hands at €42.60 (£37.15)/MWh during the most recent fortnightly over-the-counter (OTC) trading session on 24 May, according to broker Tullett Prebon.

On that day, trade data reported to ICIS showed that the UK July ‘17 Baseload contract settled at £38.90/MWh – a significant £1.75/MWh premium over the Irish market.

The two markets are connected by two 500MW interconnectors – the Moyle interconnector, which connects Northern Ireland and Scotland, and the East-West interconnector, which links Wales and the Republic of Ireland.

The East-West interconnector is currently offline for maintenance and is scheduled to return to full service on 31 May.

The UK system price – the price used to settle imbalances on the UK market – has on occasion climbed to as much as £1,286.00/MWh on low-wind days in May this year due primarily to the hefty costs needed to bring coal-fired plants into the mix to ensure system demand is met.

Towards the end of summer last year, the UK market was struck by extreme price volatility, with record prices resulting from unforeseen air-conditioning demand, low wind and plant outages.

Sources have previously told ICIS that electricity imports from Ireland can offer much-needed flexibility for the UK’s supply at times when margins are tested ( see EDEM 23 September 2016 ).

Liquidity on the Irish OTC power market has languished in recent years, as participants focus their attentions on the ongoing redesign of the Irish power market.

The process is in its third and final stage, with the new integrated single electricity market (I-SEM) due to go live on 23 May 2018 ( see ICIS briefing on Ireland’s new market ). christopher.somers@icis.com

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