The auction is a key element of the market and is designed to deliver wholesale electricity at the least possible cost. The T-4 auction also aims to encourage new investment and innovation, but only if it is the most economical solution.
T-4 auctions will take place every year for capacity to be delivered in four years’ time. In addition, further T-1 auctions will run to secure incremental capacity.
The first T-4 auction closed on April 2nd, procuring sufficient capacity to meet security of supply for the period October 2022 to the end of September 2023. The auction secured a total of 7,412 megawatts (MW) of capacity. The auction clearing price was €46,150 per MW per year.
Of the 112 generating units that qualified to take part in the auction, 93 were successful. A total of €342 million of capacity payments will be paid during the period October 2022 to September 2023.
Prior to the introduction of capacity auctions in 2017, annual capacity payments averaged in the region of €550 million.
Rodney Doyle, Market Operations Director at EirGrid Group, said: “This is a competitive auction where efficient and low-cost capacity is most likely to be successful. We are confident that the generators who have been successful in this T-4 capacity auction will provide safe and secure generation at the lowest possible cost.”
The auction was designed by the Single Electricity Market Committee (SEMC), which is made up of the electricity regulators in Northern Ireland and Ireland, along with two independent members, to ensure sufficient capacity is secured to meet demand across the island at all times.
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.
A total of 710 MW of new capacity was successful in the auction.
Mr. Doyle added: “We have worked with generators to prepare and help them to participate in the auction. I am pleased that the auction has delivered the capacity we need to secure our electricity at a competitive price.”
The provisional results are available at Provisional Capacity Auction Results Report.
EirGrid has also published the following documents on the SEMO website:
Note to editors:
The T-4 capacity auction is part of a series of changes made to the Single Electricity Market to increase cost efficiency and competitiveness. The improvements to the market have integrated the all-island electricity market with European electricity markets. The new arrangements maximise efficiency of electricity trading on interconnectors. It is also designed to encourage new investment and innovation.
The market was designed by the SEMC. This design was implemented by SONI in Belfast and EirGrid in Dublin and the upgraded market has been live since October 1st 2018.
For further information contact David Martin on 085 6030969.