1. Wind Power in Ireland: Treatment of wind in the Single Electricity Market APEx Conference, Paris 16 th October 2007

2. Presentation Overview Introduction: Wind Power in Ireland Single Electricity Market (SEM): Overview Treatment of Wind in SEM

3. Presentation Overview Introduction: Wind Power in Ireland Single Electricity Market (SEM): Overview Treatment of Wind in SEM

4. Introduction: Wind Power in Ireland Ireland Power System: –Approximately 6500 MW generation installed (excluding wind) –Peak demand: 5035 MW –Minimum demand: 1814 MW –803 MW Wind Power installed at present –Wind Grid Code –Priority Dispatch

5. Wind Power in Ireland to end 2007 900MW 0 100 200 300 400 500 600 700 800 900 1000 19921993 19941995 1996 1997 1998 1999 2000 2001 2002 20032004 20052006 2007 Year Installed Wind Power (MW)

6. Wind Power in Ireland: Future… Government Targets for Renewable Energy: –15% of electricity from renewable resources by 2010 approximately 1160 MW of wind required –33% of electricity from renewable resources by 2020 in the region of 4600 MW of wind required Ireland well placed to meet these targets: 15% 33% Connected 803 MW Contracted 451 MW Offer Process1344 MW In Queue2923 MW Total:5521 MW

7. Introduction: Wind Power in Northern Ireland Northern Ireland Power System –Operated by SONI (Systems Operator for Northern Ireland) –2132 MW generation installed (excluding wind and interconnection) –Peak demand: 1717 MW –Minimum demand: 561 MW –120 MW wind installed and an additional 138 MW approved 0 50 100 150 200 250 300 199419951996 1997 19981999200020012002200320042005 20062007 2008 Year Installed Wind Power (MW)

8. Presentation Overview Introduction: Wind Power in Ireland Single Electricity Market (SEM): Overview Treatment of Wind in SEM

9. Single Electricity Market (SEM): Overview Single Electricity Market: Joint market for both Ireland and Northern Ireland Dual Currency Market Start: 1 st November 2007 Mandatory pool with single clearing price –All energy must be sold directly into and bought from the pool –Separate physical energy trades are not permitted –De minimis level of 10 MW Separate Capacity payment mechanism Specific rules for “special” participants

10. Wholesale Market Physical Contract Customer Suppliers buy @ SMP Supplier Unit Generator Unit Generators bid in energy Pool TSO Dispatch Contracts for Differences Mandatory Pool

11. Presentation Overview Introduction: Wind Power in Ireland Single Electricity Market (SEM): Overview Treatment of Wind in SEM

12. Wind in SEM: Classification Wind Grid Code Compliant? Choice between being a Price Maker or Price Taker Price Maker Price Taker Variable Yes Autonomous No

13. Wind in SEM: Energy Payments Price Takers –If wind blowing and wind power unit produces energy, it will receive single clearing price, SMP (System Marginal Price) for all energy produced Price Makers –Scheduled by the market software based on the prices the wind power unit offers into the market. –Will receive SMP for scheduled energy

14. Wind in SEM: Constraint Payments Price Taker –If dispatched down by TSO, each Price Taker wind power unit will still receive payment in full for what could have been produced Price Maker –Always receive full energy payment for market schedule amount –If dispatched down: pay back avoided costs for difference –If dispatched up: receive costs incurred for difference Market Quantity Dispatch Quantity Pay back avoided costs Dispatch Quantity Receive additional costs incurred

15. Wind in SEM: Capacity Payments Incentive to provide capacity adequacy through economic signals Paid to all generators who provide capacity Based on a combination of Forecasted value of when capacity most needed Actual availability on the day Higher payments in times of small generation margins In current market in Ireland: no capacity payment for wind In SEM, all wind power units will receive a payment for available active power

16. Summary: Wind Power in Ireland Increasing wind power in Ireland Priority Dispatch Price taker wind receives SMP for energy produced Price maker wind receives SMP for market scheduled energy All wind power units will receive capacity payments

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