Mod_32_18 Removal of Reliability Option Exposure for in merit generation

Summary Issue Modification Aim Effect of the mod Impacts There have been a number of instances where due to system constraints, expensive units have been taken in the Balancing Market, triggering the Reliability Option (RO). Cheaper energy options, that were substantially in merit and available in the relevant pricing period have been left exposed to significant difference charges – this was not an intended outcome of the RO design. Modification Aim To address this issue, which was originally intended to be resolved through the incorporation of System Service Difference Quantities inserted into the T&SC during the final drafting stage. We appreciate that RO exposure should be incurred at units who cannot physically meet the system constraint, e.g. not being available within a short dispatch timeframe. However, units that are ready and available, should not be exposed. Effect of the mod By updating the text referenced in F.18.6, plant that is available and ‘in-merit’ relative to the RO strike price will have a system service difference quantity calculated, removing the unintended exposure that they currently face. Impacts DSUs and Suppliers may be impacted by this change. However, given that RO events are intended to be infrequent, we consider that this impact is minimal.

Modification Design RO Exposure has been driven by Operational Constraints All generators have been impacted by the RO mechanism generating difference charges during periods in which uneconomic dispatch instructions are required to resolve a specific system constraint. The TSO needs to be free to make dispatch instructions that prioritise system security. However, actions required to maintain system security should not penalise generators that sold capacity on the basis of a single-zone auction F18.6 was originally proposed by the TSO in “Exposure to CRM due to Operational Constraints” and accepted and inserted into the T&SC to resolve this, but this has not applied during the periods to date. Protecting Generators from RO Exposure as originally intended The Modification applies a two-step test to resolve the : Are generators in merit against the strike price? Are generators available to provide energy within the relevant time periods? We have used Replacement Reserve declarations as a mechanism for identifying availability – if generators were available to the TSO within that timeframe at a price below the RO strike, the LTS/RTC and Dispatch Tool would have used them unless a constraint was binding.

Short Term Reserve versus Price BOA at units priced at over €5000/MWh despite 2GW of reserve available

Justification The proposed mod furthers the following Code Objectives: (b) To facilitate the efficient, economic and coordinated operation, administration and development of the Single Electricity Market in a financially secure manner (e) To provide transparency in the operation of the Single Electricity Market (f) To ensure no undue discrimination between persons who are parties to the Code; and (g) To promote the short-term and long-term interests of consumers of electricity on the island of Ireland with respect to price, quality, reliability, and security of supply of electricity. Without Modification: Units contracted for ‘single zone’ capacity are effectively hedging transmission system constraints When the TSO moves away from the economic LTS/RTC to manage localised system security requirements, RO contracted generators face an unintended and unquantifiable exposure There is no provision within the Trading & Settlement Code or Capacity Market Code to manage this exposure