EirGrid has published the provisional results of the latest capacity auction for the Single Electricity Market. This follows the provisional results for the T-1 capacity auction which were published on December 5th.
The auction is a key element of the market and is designed to deliver a reliable electricity supply at the least possible cost. It also promotes investment in new, efficient power plants into the wholesale electricity market.
The auctions are run by EirGrid and SONI (System Operator for Northern Ireland) in their roles as Transmission System Operators in Ireland and Northern Ireland respectively, through the joint venture SEMO (Single Electricity Market Operator).
The auctions were designed by the electricity regulators in Ireland and Northern Ireland to ensure sufficient capacity is secured to meet demand across the
This auction, known as a ‘T-2’, as it secures capacity two years in advance, closed on December 5th. Through this auction, sufficient capacity was procured to meet security of supply for the period October 2021 to October 2022.
Of the 122 generating units that qualified to take part in the auction, 101 were successful.
A total of €358 million in capacity payments will be paid during this ‘auction year’.
Prior to the introduction of capacity auctions in 2017, annual capacity payments averaged in the region of €550 million.
Capacity payments are paid to generators to ensure they are available to meet the demand for electricity, especially at peak times. Successful bidders in the capacity auction will be paid during the year for each MW of capacity they sold to the market in the auction.
The T-2 auction has secured a total of 7,512 megawatts (MW) of capacity.
The auction clearing price was €45,950€/MW per year.
Rodney Doyle, General Manager SEMO (Single Electricity Market Operator), said:
“We have now completed our fifth Capacity Auction since introducing these competitive auctions in 2017, with this T-2, our second auction in just two weeks. These auctions are designed to procure safe and secure generation, at the lowest possible cost.
“This is a competitive process where efficient and low-cost capacity is most likely to be successful. This auction has ensured that we have sufficient capacity to provide a secure electricity supply through until the end of September 2022. Importantly, the auction also ensures that consumers only pay for generation that is actually required.”
“As with the T-1 auction recently, the auction price is again very stable for T-2, illustrating that the Market is operating efficiently, as it has been since 2017.”
“We work closely with generators throughout the year to ensure they are well prepared in advance of their participation in the auctions. This ensures that we have the most successful auction possible and we are pleased to see that the auction has delivered the capacity we need to secure our electricity at a competitive price.”
The capacity required from the auction took into account peak demand, security of supply, as well as the reliability and performance of generators, and a range of demand forecasts and interconnection.
EirGrid has carried out a robust assessment of the outcomes of the auction and has concluded that sufficient capacity has been procured, to provide a secure electricity supply until the end of September 2022.
More than 24 MW of New Capacity has been secured for 10 years at approximately half the net-cost of New Entrant price set by the regulator.
Gas turbine generation makes up 4,628 MW of the capacity secured through the auction, while steam turbines represent 1,554 MW, Interconnectors and Demand Side Units are 419 MW and 455 MW respectively. 100% of the qualifying capacity from hydro, interconnector, pumped storage and wind power was successful in the auction.
The provisional results are available in the Provisional Capacity Auction Results Report on the SEMO website.
The following documents are also available: