Our European and GB neighbours have already observed a phenomenon known as ‘negative pricing’ for the past couple of years but here, on the island of Ireland, it has been a much rarer event. If this is your first time looking at the island of Ireland’s electricity market all you really need to know for now is that it is called the Single Electricity Market (SEM) and trading is conducted in half-hour blocks. Let’s have a look at how many negative prices those half-hourly blocks have experienced this year compared to last year in the SEM.
First of all, what is this phenomenon and why does it happen? These are times when electricity is sold for negative prices, i.e. when suppliers are paying you to use their electricity. This can happen for a few reasons; in some cases, it may be in a producer’s best interests to keep generating even at negative prices or it can happen during periods of very high renewable output. Assetless traders can also contribute to this. It’s not even the end of the year and the number of half-hourly periods with negative prices has already surpassed the cumulative total for 2024.
Our market is split into multiple auctions. Let’s see if all the auctions have been affected equally. It’s probably the most immediate and noticeable change Greenlink brought and that’s increase in the number of negative price periods we’ve had this year. Greenlink is the name given to a new interconnector, bringing electricity from GB to us and vice versa.
We knew the intraday markets would be affected by the addition of Greenlink as prices converge between adjacent markets but between these intraday markets IDA2 has been impacted the most with more than double the number of negatively priced half-hourly periods compared to last year. There’s more solar than ever before on the island of Ireland and high renewable days in GB and Ireland have contributed to these negative prices along with trading by assetless traders willing to take arbitrage positions starting from negative prices. All these negative prices are helping to drive down the wholesale cost of electricity for us.
Interconnection and Future Plans
Our island, on the western fringe of Europe, may seem a little isolated but we are in fact very connected to our nearest neighbour GB by three interconnectors (Moyle, EWIC and Greenlink) contributing their electricity generation to our fuel mix and allowing us export options for those times when we produce excess generation here. Greenlink was completed and became operational in February of this year. Interconnection is massively important for any market but maybe more important for the island of Ireland than other markets.
There are two more interconnectors currently being constructed or already approved. The first one is the Celtic Interconnector between Ireland and France and the second is the Mares Interconnector between Ireland and GB. Construction on the Celtic Interconnector is already well underway. In August they began laying the underwater cable marking another milestone for the project. When it’s finished it will run 575 km from Cork to Brittany in France and allow for the exchange of 700 MW of electricity. Much of the onshore work where the cable lands in Ireland and the converter station in Carrigtwohill has been completed already so the project is making good progress. Originally it was due to be completed and operational in 2026 but now Spring 2028 is the expected operational date. Obviously, it takes a lot of different groups working together to make a project like this happen, landowners, communities, and the TSOs in France and Ireland, RTE and EirGrid, all of whom I’m sure are eager to see it completed.
And then we can all benefit from the likely reduction in wholesale electricity prices it will bring.
Author: Joseph Cullen, Senior Trading Analyst