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I-SEM Chart of the Week

2018

Coming the long way: wind forecast and imbalance prices

Emma Burns Senior Consultant

Last week wind generation accounted for 56% of the generation mix on an all-island basis. The market also saw significant volatility in the Balancing Market (BM), with the Single Electricity Market Operator (SEMO) receiving pricing disputes related to early trading in the BM. While there has been much discussion about the volatility arising in imbalance settlement, there is an interaction with System Operator (SO) forecasting that has been neglected in the public discussion to date. In this week’s I-SEM Chart of the Week we look back at EirGrid’s wind forecast performance in 2018 and highlight the impact that this trend could have on imbalance prices in I-SEM. We’ve come a long, long way together This chart shows the percentage difference between EirGrid’s wind forecast and actual wind outturn, as measured by EirGrid’s own data. In 2018, the SO’s forecasts tended be conservative, with outturn wind typically being about 20% higher than forecast. In other words, wind output from the SO’s perspective has been routinely ‘long’ compared to its forecast. As a result, wind may effectively be providing an additional reserve margin that helps the SO balance the system in real time. We observed this trend in SEM, but there was no material impact on market outcomes or individual companies, with ex-post settlement for all energy and the costs for out of balance volumes recovered from suppliers via the Imperfections Charge. However, with the advent of I-SEM and the ...

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