The document should be prepared professionally using the Harvard referencing system. A guided word count is given beside each question. Part A - I-SEM Overview 1. Ireland transitioned to a new...

The document should be prepared professionally using the Harvard referencing system. A guided word count is given beside each question.

Part A - I-SEM Overview

1. Ireland transitioned to a new electricity market in October 2018 called I-SEM. Four key aspects of the market architecture are listed below. Briefly explain what is meant by each item and outline how it is achieved practically in the market place.

· Central dispatch by System Operator

· Introduction of balance responsibility

· Mandatory (exclusive) participation in physical markets

· Retention of absolute priority dispatch for renewable generators (400 words max)

2. In the light of concerns about resource adequacy, some EU Member States have introduced capacity mechanisms. Discuss the reasons for these concerns addressing in your answer the
merit order effect
and the
missing money problem
and subsequently briefly outline how the capacity market operates in I-SEM. (400 words max)

3. Discuss the need for and the classes of System (Ancillary) Services that are typically required in an electricity market. Use Ireland as context for your discussion. (400 words max)

4. Briefly explain the trading arrangements in I-SEM. Subsequently, determine the net revenue for a supplier/retailer in I-SEM who established the following position on May 11^th
from 5pm-6pm as outlined in Table Part A (400 words max)

Table Part A

Part B – Forward Market

1. Price spread volatility between energy markets creates the need to allow market participants to hedge against the market price differentials which result from transmission congestion. Briefly discuss the different kinds of transmission risk hedging products available and discuss why you believe Ireland went for FTR options. (400 words max)

2. A participant in the Irish energy market bought a FTR from GB-ISEM and also from ISEM-GB for the East West Interconnector (EWIC).

The GB-ISEM FTR Auction price cleared at €5.11

The ISEM-GB FTR Auction price cleared at €3.21

Using the data in the excel sheet provided titled ‘Forward Market exercise’ which gives the GB and I-SEM day ahead prices for February 2019. Determine the profitability of the FTRs purchased. Analyse your findings and discuss your results. (Max 1000 words)

Part C - Balancing Market

1. Justify the need for a balancing market in an electricity Market. Illustrate how the balancing market integrates into the I-SEM design and explain the application of the flagging and tagging methodologies. Also discuss the application of Administered Scarcity Pricing. (Max 400 words)

2.
You are provided with the DA prices for February 2020 along with the Imbalance prices for February in excel files titled ‘balancing exercise’. Analyse the data to review how ISEM prices are differing in these time frames. Discuss your findings. If you wish, you can further support your answer with data from the SEMO website
https://www.sem-o.com/market-data/dynamic-reports/
(Max 1000 words)

Part D - Gas Market

Give a brief overview of how Ireland’s Gas Market operates. In your answer you should make reference to the following:

· The supply and demand of gas in Ireland.

· The role of the CRU

· The role of shippers in the gas market

· Gas code of operations

(Max 500 words)

In the excel files titled ‘Gas exercise’ you will find UK day ahead gas prices and day ahead electricity prices in Ireland for all of 2019. Use this data to analyse the gas prices and discuss the relationship between the UK gas market and the Irish Electricity Market. Discuss your findings. (1000 words max)

Note:
Day ahead electricity prices recorded are prepared the day previously e.g Day ahead Prices recorded for 2^nd
April were from the Day ahead auction on the 1^st
april.

Part E - Energy Procurement

1. In relation to the procurement of energy for a large energy user, answer the following:

Discuss the difference between a fixed price contract and an indexed price contract and outline the advantages and disadvantages of each.

In relation to a flexible contract outline what is meant by dynamic risk management and discuss its relationship with the UK gas market. (400 words max)

2. On January 1st 2019 an Energy Manager of a large energy user established a flexible electricity contract for his facility for all of 2020. The contract gas base in p/therm is set out in the excel file ‘Energy procurement Exercise’. On March 1^st
2019 following a drop in market prices as shown in Figures Part E i, ii and iii, the energy manager hedged 75% of Winter 2019, 25% of Summer 2020 and 50% of Winter 2020.

Assuming the electricity consumption is as forecasted in your excel file titled ‘energy procurement exercise’ and no further hedging occurs, determine the forecasted total energy charges for the year 2020 accounting for gas adjustment.

When you complete your spreadsheet discuss your findings and analyse the results. (1000 words max)

Figure Part E (c) i Winter 19

Figure Part E (c) ii Summer 20

Figure Part E (c) iii Winter 20