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The Regulatory Authorities Case Study

Economic appraisal of the requirement for additional ancillary services for the Irish Single Electricity Market

The Regulatory Authorities

Ireland and Northern Ireland

The Commission for Energy Regulation (CER) and the Northern Ireland Authority for Utility Regulation (NIAUR) (the Regulatory Authorities (RAs)) commissioned IPA to provide economic, financial and technical consultancy services to support supply side analysis and economic appraisal of the requirement for additional system services (sometimes called ancillary services). This work was part of the DS3 Programme - Delivering a Secure and Sustainable Electricity System initiated by the TSOs and supported by the RAs.

This work was carried out in the context of the All-Island Project which has created a Single Electricity Market (SEM) across Ireland, regulated jointly by the RAs. These market arrangements are now in the process of modification to make them compliant with the EU Third Package.  The new market structures are called I-SEM, and the RAs are managing the detailed design of the market elements with the aim of implementation of I-SEM in 2017. It was therefore important that IPA’s proposals were consistent with the evolving I-SEM proposals.

Following a review of the work undertaken on the previous System Services Review, the SEM Committee decided that that further economic analysis was required to support a decision on the procurement and remuneration of system services.

IPA provided independent consultancy support on the following issues:

  • A review of demand side analysis – The RAs agreed modelling scenarios and assumptions for the demand side modelling carried out by the TSOs. IPA provided assistance in reviewing and interpreting results;
  • A supply side analysis – IPA reviewed a previous study and carried out additional financial analysis to determine the costs of the “supply” curve for system services; and
  • An analysis on the options for procurement mechanisms - IPA provided assistance in determining the appropriate framework for procuring system services and advising on these options in light of the demand and supply side analyses.

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