European market integration

Changes to Single Electricity Market (SEM) designed to create a competitive market across Europe and ensure compliance with the European target model.

Integrated Single Electricity Market

A redesign of the current Single Electricity Market (SEM) is required because of changes to European legislation that are designed to harmonize cross border trading arrangements across all European electricity markets.

These changes are designed to create a competitive market across Europe and require compliance with a European ‘target model’ that will link the separate markets.

The programme to redesign the wholesale market is known as the Integrated Single Electricity Market (I-SEM) programme.

Compliance

Compliance with the European Target Model and development of new market arrangements are the responsibility of the member states.

The Department for the Economy and the Irish Department of Communications, Climate Action and Environment (DCCAE) have charged the SEM Committee with developing these new market arrangements.

The SEM Committee was created as the governing body of the current Single Electricity Market and its membership is drawn from the Utility Regulator (UR) in Northern Ireland, the Commission for Regulation of Utilities (CRU) in Ireland and expert independent members.

I-SEM Capacity Remuneration Mechanism State Aid approval

The design of new wholesale energy market arrangements, which is proceeding under the Integrated Single Electricity Market programme, includes a measure designed to ensure efficient procurement of capacity. 

This measure, known as a Capacity Remuneration Mechanism (CRM), required parallel notifications under the state aid regime by Northern Ireland and Ireland.

European Commission approval

On 24 November 2017, the European Commission approved the measure and issued a Press Release to that effect:

Collaborative approach

The two Departments and two Regulatory Authorities have worked closely to secure state aid approval for the Capacity Remuneration Mechanism.

The Department for the Economy also acknowledges the expert analysis of the Transmission System Operators which has been critical to the case for the measure.

The Department has engaged extensively with the European Commission on this matter and welcomes its approval of the measure.

Capacity auctions

The approval allowed the T-1 auction to proceed in December 2017 and new market arrangements to go live in May 2018.

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