With the introduction of I-SEM last week, other releases in the energy market may have gone unremarked, including the SEM Committee’s (SEMC) decision on the parameters for the first T-4 Capacity Remuneration Mechanism (CRM) auction.
Making a robust investment case for new-build dispatchable assets has been a challenge in Ireland and Northern Ireland for many years. The only significant dispatchable plant to be built in I-SEM recently has been the Dublin Energy from Waste facility. However, elsewhere entry signals have been absent. As noted previously, the new market environment and increasing wind levels put pressure on the wholesale revenues available to thermal assets.
The T-4 auction due in March 2019 may determine the investment case for potential new assets. The announced plant closures suggest an opportunity for future capacity providers, but history provides a cautionary example. Expectations were high ahead of the first T-4 capacity auction in Great Britain (GB), and price movements there over a number of years took many by surprise.
In this week’s blog, we examine the first T-4 capacity market auctions in GB and discuss whether they hold lessons for those seeking to build assets in I-SEM.
