Written answers

Wednesday, 15 June 2011

Department of Communications, Energy and Natural Resources

Electricity Generation

10:00 pm

Photo of Michelle MulherinMichelle Mulherin (Mayo, Fine Gael)
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Question 379: To ask the Minister for Communications, Energy and Natural Resources if the single electricity market is of the type known as a regulatory requirement market in which labour and energy costs are treated as expenses and passed on to consumers without markup and in which generators make profits from investment in capital equipment such as fossil fuel-flexible generation plant and grid infrastructure. [15224/11]

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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The Single Electricity Market (SEM) is the wholesale electricity market for the island of Ireland, regulated by the Commission for Energy Regulation (CER) and the Utility Regulator in Belfast. It has been operational since November 2007, when the trading of wholesale electricity in Ireland and Northern Ireland on an All-Island basis commenced, underpinned by parallel legislation in Ireland and Northern Ireland. The decision making body which governs the market is the SEM Committee, consisting of the CER, the Utility Regulator as well as an independent member (who also has a deputy), with each entity having one vote.

The type of market in place in Ireland under SEM is a gross pool market. Accordingly, generation costs are set in the SEM by means of the gross pool market into which all electricity generated or imported onto the island of Ireland must be sold, and from which all wholesale electricity for consumption or export from the island of Ireland must be purchased. In general, conventional generators bid their short run marginal costs into the SEM on a half hourly basis in accordance with the SEM Bidding Code of Practice.

These costs include operating, fuel and carbon costs. These costs may vary on a half hourly basis for each generator and will vary between generators, even those using the same generating method and/or fuel. Fixed labour costs are generally not bid into the pool but are paid for through the gross profits that generators receive in the market. Fluctuations in the internationally traded price of fossil fuels have a particular impact on costs for fossil fuel generators.

The bidding structure of the gross pool market provides an incentive to generators to invest in more efficient generation technology. All generators in SEM, regardless of generation method or fuel type, also receive capacity payments which are designed to cover generators' long run costs as well as to encourage new investment in capacity for security of supply. A background to SEM, how it works and how it benefits customers across the island is provided in a factsheet by CER, which is available on its website, www.cer.ie.

Investment in grid infrastructure is a matter for EirGrid in respect of the transmission network and ESB Networks in the case of the distribution network. Generators only own their own connection assets. The extent of allowable costs, which may be passed onto electricity consumers in respect of grid investment and maintenance, is regulated and rigorously overseen by the CER and subject to a full scale review every five years.

Photo of Michelle MulherinMichelle Mulherin (Mayo, Fine Gael)
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Question 380: To ask the Minister for Communications, Energy and Natural Resources the total amount of fossil fuel generating capacity in the single electricity market; the amount of fossil fuel-flexible generation plant in the SEM and in the Gate 3 licensing programme; the amount of fossil fuel-flexible generation capacity in the least cost portfolio of the all-island grid study in megawatts and as a percentage of total fossil fuel generation; the amount of electricity fossil fuel-flexible plant is predicted to produce in the modelling scenario that best reflects our current economic situation; the average number of hours per year fossil fuel-flexible generation plant is predicted to generate electricity and the predicted mean cost of a megawatt hour of electricity produced by fossil fuel-flexible generation as well as unit costs of production from other sources. [15225/11]

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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The oversight and operation of the Single Electricity Market is the statutory responsibility of the Single Electricity Market Committee (which comprises the Commission for Energy Regulation (CER) and the Northern Ireland Utility Regulator as well as an independent Member) and the Single Market Operator EirGrid and SONI.

I would refer the Deputy to a selection of data in the public domain in response to the detailed technical questions raised. The total amount of fossil fuel generating capacity in the Single Electricity Market (SEM) together with the amount of fossil fuel flexible generation is outlined in the SONI/Eirgrid All-Island Generation Capacity Statement 2011-2020 . The amount of the fossil fuel flexible plant in the Gate 3 licensing programme is available in the CER Direction on Conventional Offer Issuance Criteria and Matters Related to Gate 3 (CER/09/191). Further detail about Gate 3 is available on the CER website: www.cer.ie.

The amount of fossil fuel generation capacity, whether flexible or non-flexible, in the least cost portfolio of the All Island Grid Study is contained in that document. The study contains the results of various scenarios, including the amount of electricity generated from fossil fuel plant. The economic assumptions underlying these scenarios can be compared with the current economic situation. Forecasts for electricity outputs from various conventional fuel types and from renewable generation are modelled and analysed for the years up to and including 2020 in the Sustainable Energy Authority of Ireland (SEAI) publication Energy Forecasts for Ireland to 2020 .

Apart from the SEAI forecasts above, other reports have also estimated electricity generation output from fossil fuels and the mean or unit cost of electricity produced from fossil fuel and other sources, for years up to 2035 at the latest. They include the documents referenced above, recent ESRI studies, the 2010 Pöyry report for EirGrid on Low Carbon Generation Options for the All-Island Market and the all-island TSO Facilitation of Renewables Studies. All reports referred to above are available through the links above and on the relevant Agencies' websites.

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