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Energy - Taking forward our National Conversation

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Annex A

Summaries of existing cross border regulatory structures for electricity

Nord Pool

The common Scandinavian electricity market allows Finland, Sweden, Denmark and Norway to assist each other when additional electricity supplies are required. As the generating modes differ and are distributed differently in the various countries, the need for additional supply will vary from country to country and at different times. This makes it possible to share Nordic energy resources, helping to optimise available power and reduce local deficits.

The Scandinavian power systems can roughly be divided in two categories: the hydro-based system in Norway and northern Sweden, and the thermal system of Denmark, southern Sweden, and Finland. A hydro-based system is constrained by the amount of energy available over time whereas a thermal one by the peak capacity. Due to the complementary nature of hydro and thermal-based systems, trade in Scandinavia has always been extensive and well organized.

There are different national regulatory authorities for the Scandinavian power sector, with different powers and links to other important authorities such as environmental agencies, competition authorities, and ministries. There are also a set of transmission system operators, one in each of Finland, Norway, and Sweden, and two in Denmark. These different regulators operate within a common market, at the same time.

Irish Single Electricity Market

The SEM is the first step towards an all-Ireland energy market and is based on a traditional 'pool' concept that incorporates a single system marginal price ( SMP) for electricity and also involves capacity payments. The market is jointly regulated by the Northern Ireland Authority for Utility Regulation ( NIAUR) & the Republic of Ireland's Commission for Energy Regulation ( CER).The Single Electricity Market Operator ( SEMO) facilitates the continuous operation and administration of the Single Electricity Market. Under the new system, generators bid on the basis of short-run marginal cost. A single SMP is set for each half-hour trading period. Suppliers pay SMP (plus capacity payment and a so-called imperfections charge); generators receive SMP (plus capacity payments and constraints payments). All generators (over 10 MW) and suppliers sell and purchase electricity through the new SEM.

The new regime brought together two separate wholesale electricity markets in 2007 and on both sides of the border bilateral physical contracts were utilised. Under the terms of the SEM agreement, the Irish and Northern Irish power markets have effectively become one wholesale market with an aim to see market integration across North West Europe.