SONI: New electricity market achieves security of supply and value for consumers in NI

14 March 2018

New market arrangements mean that Northern Ireland consumers have a secure supply of electricity at the least possible cost. That was SONI’s (System Operator for Northern Ireland) message to MPs during today’s Northern Ireland Affairs Committee Inquiry into Electricity at Westminster.

Introduced in 2007, the Single Electricity Market was designed to benefit consumers across the island of Ireland.  In order to build on this success, SONI is implementing the Integrated Single Electricity Market (I-SEM), designed by both regulators on the island, which is now in the Market Trial phase.

When in place, the I-SEM will deliver further competition and will increase downward pressure on wholesale electricity prices; benefiting consumers in Northern Ireland.  It will integrate the all-island electricity market with European markets, ensuring that Northern Ireland has access to electricity at the best price for consumers.

To prepare for the introduction of the I-SEM, a capacity auction was held in December 2017 when electricity generators were invited to bid for capacity contracts for May 2018 to September 2019.

Creating value for consumers is the driving force behind the auction.  It is designed to reward the most efficient generators, while older, less efficient and more costly plant was unsuccessful.  The results of the auction were published in January 2018 with 93 out of 100 bidders awarded capacity contracts. 

The successful auction ensures that SONI can call on sufficient capacity to meet the security of supply standard set by the Utility Regulator for the auction period.

It will also result in savings of circa £50m to NI consumers (Utility Regulator estimate) – because generators will no longer be paid for capacity that is not required.

Robin McCormick, General Manager, SONI said:

“We understand that energy costs are a key concern for homes and businesses throughout Northern Ireland and we are constantly working to ensure wholesale electricity is supplied at the lowest cost possible.

“This is a key driving force behind the introduction of the I-SEM, and the recent capacity auction has achieved security of supply in Northern Ireland between May 2018 and September 2019 at the most efficient cost to consumers.

“This is good news for everyone and is important for employers and economic growth.

“We’re not in the business of taking risks and our analysis, which considers a number of different scenarios, shows that the recent auction means we’ll have access to the generation capacity we need to meet demand in a way that works best for consumers.

“The profile of generation in Northern Ireland is rapidly evolving.  This means there are increasing numbers of sources of electricity that we can utilise.

“We are seeing more and more renewables coming online and the level of wind energy, for example, has increased significantly in recent years, meaning it now plays a key role in our energy mix. 

“Looking ahead, further auctions will be held that will provide generators, including those who weren’t successful in the December auction, the opportunity to bid for contracts to supply electricity beyond 2019.

“To achieve long-term security of supply, the North South Interconnector project remains critical.  Importantly, it is also required to ensure the I-SEM works as efficiently as possible to generate further consumer savings throughout Northern Ireland.”