SONI, (the Electricity System Operator for Northern Ireland) has published the provisional results of the latest capacity auction for the Single Electricity Market.
The capacity auction is a key element of the all-island wholesale electricity market and is designed to deliver a reliable electricity supply at the least possible cost. The auction also aims to encourage new and efficient power plants into market; but only if these are competitive and economical solutions.
The auctions are run by SONI and EirGrid in their roles as Transmission System Operators in Northern Ireland and Ireland respectively, through the joint venture SEMO (Single Electricity Market Operator).
The auctions were designed by the electricity regulators in Northern Ireland and Ireland to ensure sufficient capacity is secured to meet demand across the island.
This auction is known as a ‘T-4’ because it secures capacity four years in advance. The auction ran on 27th of April, procuring sufficient capacity to meet security of supply for the period October 2023 to October 2024.
T-4 auctions take place every year, with the next scheduled for January 2021.
The T-4 auction has secured a total of 7,322 megawatts (MW) of capacity for the island, with 1,924 MW of this capacity for Northern Ireland.
The auction clearing price was 43,666 £/MW per year.
Of the 124 generating units that took part in the auction, 115 were successful, 35 of these in Northern Ireland.
A total of £343 million of capacity payments will be paid to generators who were successful in the T-4 2023/24 Capacity Auction during this ‘auction year’ (October 2023- October 2024), £107 million of which will be paid to Northern Ireland generators.
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.
Jo Aston, Managing Director, SONI said: “This is an important auction for securing longer term capacity at the most competitive cost. We are aware of our responsibility to ensure a reliable and efficient electricity supply; this is crucial today and tomorrow. This auction has operated as it should, providing Northern Ireland with electricity security until October 2024 and importantly, also ensuring that consumers only pay for the generation that is actually required.”
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 761 MW of new capacity was successful in the auction.
Gas turbine generation makes up 5269 MW of the capacity secured through the auction, while steam turbines represent 600 MW, Interconnectors and Demand Side Units are 423 MW and 505 MW respectively.
The provisional results are available at Provisional Capacity Auction Results Report on the SEMO website.
The following documents are also available: