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Ch-ch-changes – demand side and the Capacity Remuneration Mechanism

Tom Palmer Principal Consultant

This week saw the release of the SEM Committee (SEMC) decision on T-1 2019/20 Capacity Auction Parameters and Enduring De-rating Methodology (SEM-18-030). This was then followed up by SEM-O releasing the Initial Auction Information Pack and qualification pack for the December auction. The first Capacity Remuneration Mechanism (CRM) took place in December 2017 for the T-1 2018/19 delivery year. The lower capacity price (than under the existing Capacity Payment Mechanism) and treatment of constraints emphasised the level of change in how capacity is allocated under the new trading arrangements. This week’s I-SEM Chart of the Week discusses the impacts of the changes to the auction parameters for the T-1 2019/20. Time may change me The decision from the SEMC confirmed that most of the parameters from the first auction remain unchanged. As discussed previously, a number of units (see CRM auction: age isn’t) were unsuccessful in the first auction, raising regional security of supply concerns in Northern Ireland. This may be a concern again as the locational constraints that resulted in this outcome remain unchanged. The actual changes to the parameters and methodology include an update to the exchange rates used, impacting the Sterling rate used for Northern Irish generators, and changes to Demand Side Unit (DSU) de-rating curves. Other decisions were considered, but some have been deferred to future auctions. The delay in the Generation Capacity Statement and a revised Ten Year Transmission Forecast Statement means unspecified changes may follow thereafter. There will also be a separate decision ...

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