Navigating I-SEM: Price volatility and the pathway to 2030
We are pleased to present Aurora’s new strategic insight report, Navigating I-SEM: Price volatility and the pathway to 2030. The report presents our analysis on I-SEM volatility since I-SEM go-live, exploring the key fundamental and non-fundamental drivers of the observed prices. The implications of meeting the Government’s ambitious 70% renewable target in 2030 are also discussed, alongside an estimate of the impact on total system cost and implications for consumer household bills.
Key messages to emerge from this analysis are:
- Fundamental market reforms between SEM and I-SEM has led to significant changes within the markets, including significant volatility in balancing market prices. The day-ahead market appears to be functioning as expected despite initial peak prices due to market uncertainty.
- Several drivers contribute to I-SEM price volatility and peak prices, including system constraints and imperfect competition. The high volatility observed within balancing market prices has been primarily driven by wind generation and non-fundamental issues with the market design.
- The government commitment to increase the RES target to 70% by 2030 would require the integration of an additional 6TWh of renewable generation on the system, which would cost €200-300m, on average, more to the economy as a whole increasing customer electricity bills by, on average, €25-38 per household.
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