Happy Birthday I-SEM – Part 1

Tea and cake in the kitchen this afternoon everyone, it’s I-SEM’s birthday! It’s hard to believe it has already been one whole year of the new market design and look how much it has grown! It has been very interesting to look back on the past year to see what has happened in the new market, whether it is working or not, and how it compares to the old SEM world as well as our GB neighbours.

This week we’re bringing you a two-part series of what we have seen in the first year of I-SEM and how it has compared to other markets as well as the old SEM world.

The Headlines

First up is the headline stats. Here’s what a year of I-SEM prices looks like.

Average and Standard Deviation

Average Day-Ahead Prices were €56.84/MWh and average Imbalance Prices were €53.34/MWh. The average Day-Ahead to Imbalance Price Spread (on a half-hourly basis) was €3.73/MWh. While Imbalance prices on average were lower than Day-Ahead prices, the price swings were much more volatile, with standard deviations of €68.91/MWh in the Balancing Market vs €26.71/MWh in the Day-Ahead Market.

Highs and Lows

Day-Ahead prices dropped to as low as -€10.29/MWh (05:00 17.02.2019) during the night when demand was super low showing what some power plants are willing to pay the system just to stay on. On the flip side, when demand was high (and wind is low), Day-Ahead prices peaked at €365.04/MWh (17:00 02.01.2019).

The Imbalance Price is on a different level altogether. In the last year we have seen prices as low as -€281.16/MWh (even lower if you look at 5-minute periods) when the system is long. We’ve also seen prices rise to €3,773.69/MWh, which occurred on 24^th January 2019 due to unplanned outages in Northern Ireland combined with an exporting Moyle interconnector and a maxed-out North-South tie line. Read more about that event at one of our earlier blogs here.

Negative Prices and Price Spikes

Day-ahead prices were negative for 56 hours during the last year, 0.6% of the time. Imbalance prices were negative for 809 half hour periods, 4.6% of the time. Imbalance prices also exceeded the capacity market strike price of €500/MWh on 9 occasions during the past year. Any generator unit with a capacity contract were obliged at this time to pay the system back the differential between the energy price and the €500/MWh strike price, regardless of whether or not they received that energy price in the first place.

Prices by Hour of the Day

Average Day-Ahead and Imbalance prices on an hourly basis follow the typical hourly demand profile with peaks between 08:00-10:00 and 16:00-18:00. The standard deviation of Day-Ahead prices is highest at the 16:00-18:00 peak period. Imbalance price standard deviations are less consistent, with an extreme peak occurring during the 13:00 period. This is heavily influenced by the price spike that occurred on 24^th January 2019. If you were to remove that price spike from the data set, the standard deviation at 13:00 almost halves from €164/MWh to €89/MWh.

Prices by Month

Average Day-Ahead prices during Winter were approximately €67/MWh compared to €47/MWh in Summer. Average Imbalance prices were approximately €63.50/MWh in Winter and €43/MWh in Summer. There is a seasonal pattern developing in the Day-Ahead standard deviations in the right-hand side graph below as it dips during the Summer months. Already we’re seeing it picking up again for the Winter 2019 period. It is difficult to see a trend in the Standard Deviation of Imbalance prices at the moment. For now, it seems to be getting less and less, however it is expected to increase again in the next Winter period but perhaps not as high as the opening I-SEM months.

Day-Ahead vs Intra-Day Markets

I’m conscious the above was focussed on Day-Ahead and the Balancing Market only, but in reality, there is some trading activity in the Intra-Day Markets. 93% of ex-ante trades were made in the Day-Ahead market. The remaining 7% was spread across the three intra-day markets, with 3% in IDA1, 2.5% in IDA2 and 1.5% in IDA3. The graph below shows the ex-ante traded volumes per market.

The table below summarises the price statistics of each ex-ante market. The average price increases as the market moves towards real-time.

Anyway, don’t forget that cake!

Make sure to keep an eye out for tomorrow’s post where we look at how this past year of I-SEM prices compare to our GB neighbours as well as the last year of SEM.

Here at ElectroRoute, we offer products to clients that remove the risks of these price spikes and large standard deviations. If you find this series interesting and would like to find out more about what we offer at ElectroRoute, please get in touch anytime with our Client Services team at clientservices@electroroute.com.