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There is a light that never goes out: T-4 CRM qualification

Joe Camish Analyst

On 8 March the summary qualification results for the upcoming 2022/23 T-4 capacity auction were released, breaking down those qualified to bid by technology type. As previously noted, this auction is an important one as it will give an indication of the new capacity seeking to connect to the Irish system during a period when a significant volume of thermal assets is scheduled to close. As bidders consider their strategy for next week, our SEM Chart of the Week considers what these qualification results tell us.  Take me out tonight… The below chart presents the new and existing de-rated capacity that has qualified for the coming T-4 auction. The qualified capacity totals 10.9GW of new and pre-existing capacity, spanning across nine different technology classes. 7.9GW of pre-existing capacity qualified, largely made up of gas and steam turbine assets. The accompanying auction information pack noted that the capacity requirement for the auction is 7.5GW. This potential volume suggests concerns could ease about a possible capacity squeeze in the near future.  Such concerns stemmed from the latest Generation Capacity Statement published by EirGrid, which highlighted a number of plant closures (e.g. Killroot, Aghada and North Wall units), coupled with the current UK policy to end coal-fired generation by 2025 potentially impacting Northern Ireland. Driving in your car… Participants had previously queried if the CRM would provide entry signals into the market. A little over 3.0GW of new capacity qualified for the T-4 auction, predominantly comprising 2.4GW capacity from gas turbine assets suggesting that new-build gas plants may be on the horizon. At what scale will new gas-fired generation take? Will these be large scale, similar to their predecessors? Or will they be smaller, similar to the gas recips seen in GB? On a small-scale system with a lot of wind, (for context; Ireland generated the largest share of its generation from wind assets across the entirety of last month) smaller assets may be more beneficial for shaping output to demand. If there is a mixture, the relative weighting could tell the market a lot about the future generation portfolio. There is also a locational question (which featured in a previous SEM Chart of the Week). Given the constraints in Northern Ireland and Dublin, will enough plant come through to satisfy demand in those areas? For the Dublin region, the CRM may become an alternate route for new plant. This comes after the CRU’s October 2018 direction to EirGrid requiring the system operator to issue a connection offer to new successful plant in the Dublin constraint area. It was noted that a similar direction might be issued again in the following T-4 capacity auction for 2023/24. I thought oh God, my chance has come at last… DSU capacity ranks third highest of the total qualified capacity (600MW). With EirGrid forecasting total electricity requirement to increase over the next decade and with the growth of data centres in Ireland set to rise, this could highlight the value of DSUs for both ...

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