Northern Ireland is improving the security of electricity supply for domestic and business customers up to 2023-4.
An auction has just taken place where potential new investors were competing with existing plants to be awarded continuing capacity contracts.
The Single Electricity Market (SEM) for the whole island of Ireland is a sensible concept to ensure that customers and industry can indirectly benefit from the economies of scale in an all-island market.
In turn, the SEM is part of an interconnected market with GB as well as less directly linked to the wider EU arrangements.
A continuing capacity 'gap' closer to home is the long awaited new north-south connector crossing the Irish border.
That 'gap' is costing customers about £25m p.a.
A feature of the all-island concept is that electricity supplies also flow through two major undersea electricity connections: (1) the Moyle Interconnector and (2) the east-west interconnector from Ireland to Wales.
These interconnectors give the all-island system the equivalent of two additional large conventional power stations.
After early teething problems, both have now established an acceptable degree of reliability.
The auction process to allocate contractual access for electricity generators is an interesting mechanism to regularly test the market to allow new entrants to bid for market share with enough adequate notice to build new plant or to allow an unsuccessful plant to withdraw.
To repeat a long standing criticism of the publicity-shy Single Electricity Market Committee (SEMC), the auction process should deliver a much more easily understood flow of information for better public understanding.
The auction process has been under way since September 2019.
The provisional decisions were released on May 5 and the approved results are due on June 5.
The papers released on behalf of SEMC are not designed to ensure easy comprehension.
For Northern Ireland, the auction process has two important dimensions. First, in an all-island outcome, Northern Ireland can expect to benefit from the arrival of more competitive prices from new investments. Second, in the auction allocations because of the deficiency in the all-island grid, Northern Ireland's generation allocation is subject to a locational constraint.
When needed, some generation capacity must be accepted which quotes a slightly higher price to ensure that NI has sufficient capacity when it cannot rely on large enough flows of cross-border supply.
The provisional auction results for electricity supply in NI contained a number of surprises.
They are expected to show, using capacity de-rated in the auction:
• A proposal for a large new power station located in Belfast was unsuccessful;
• The coal/oil burning Kilroot power plant is not listed and is expected to close;
• Kilroot, through its new Czech owners, won NEW capacity contracts for 338 mw;
• Ballylumford, also Czech owned, won continuing contracts for 527 mw;
• Six Open cycle gas turbines at Kilroot and Ballylumford for 235 mw remain in contract;
• Coolkeeragh, owned by ESB, remains in contract for 408 mw;
• Dungannon based iPower Solutions expects to supply 57 mw;
• Contourglobal Solutions (NI) wins contracts for 14 mw;
• Energia Customer Solutions NI wins contacts for 8 mw.
A feature of the electricity generation capacity in NI now and into the immediate future is the extent that investments are owned outside NI.
The new investment at Kilroot is part of the larger international EP UK group which, in turn, has Czech owners, who bought Kilroot and Ballylumford from the American AES corporation.
Contourglobal Solutions (NI) is a subsidiary of a company registered in Cyprus but trading from a base in the Cayman Islands.
Energia Customer Solutions is in the same group as Power NI, the largest supplier to the NI domestic market but this group (descended from the former Viridian Group) is now owned by investors based in the Cayman Islands.
In a surprising contrast, Northern Ireland is proving a successful location for external energy investors but a place of less investment success for local entrepreneurs.