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I-SEM Chart of the Week


Point Break: week 1 volatility in I-SEM

Evie Doherty Senior Consultant (Ireland)

Since I-SEM go-live on Monday 1 October, the industry has been watching and waiting to see how the design holds up in real life. Although it is too soon to be able to identify trends or draw many conclusions, much of the discussion in the industry has centred around liquidity and balancing. This is to be expected as these market elements contain much of the potential risk with this new world. What have we observed in other new markets and how did things evolve in terms of volatility and prices for balancing? In this week’s I-SEM Chart of the Week, we take a look back to when England and Wales moved from a pool-based electricity market to the NETA market structure (known as BETTA from 2005, when the design was extended to Scotland), which has many similarities to I-SEM. In particular, we focus on how imbalance pricing evolved in the first year after the NETA go-live on the 27 March 2001. You crossed the line The NETA imbalance price at go-live was calculated differently from I-SEM’s imbalance settlement price, in that different prices were calculated depending on whether a participant was long or short. That said, it provides an interesting proxy as to how the price evolved over time. Figure 1 shows the System Balancing Price (SBP), which on a simplified level was a punitive price calculated against participants who were short when the system was tight. Note that the data for March was only over five days compared with a ...

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