The Electricity Market in Ireland: Market Players & Suppliers Review
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The Electricity Market in Ireland

This post is a compact summary of the operation of the electricity market in Ireland. References have been added throughout to guide the reader to original and greater sources of information.

Utilities Market in Ireland

Until the 90’s most energy markets in Europe were characterized by monopoly-based organizational structures. Similar to other EU countries, the electricity market in Ireland was liberalized and opened to competition in 2000 as a result of EU directive 96/92/EC[1].

Today, the Irish electricity market is governed by the Internal Market in Electricity Directive 2009/72/EC[2], which has introduced the common rules for the generation, transmission, distribution and supply of electricity in order to create competitive, secure and environmentally sustainable markets.

1. Market Players
1.1 Regulatory Authority
1.2 Generators
1.2.1 Fossil-Fuel power plants
1.2.2 Renewable Energy Sources
1.2.3 Demand Side Units and aggregators
1.3 Transmission System Operator
1.4 Distribution System Operator
1.5 Metered Data Provider
1.6 Suppliers
1.7 Market Operator
2. Joining the market
2.1 The Single Electricity Market
2.2 Generator bids
2.2.1 Traditional power plants
2.2.2 Renewable Energy production
2.3 Market Schedule
2.4 The Retail Market
3. Moving to the Single European Energy Market with I-SEM




From generators to end-consumers, electricity passes through a network of high voltage lines and substations, where the electricity voltage is reduced and taken onwards through the distribution system to individual customers’ premises. The running, management and regulation of such power exchange involve numerous players.

Republic of Ireland Northern Ireland
Regulatory Authority CER UREGNI
Generators Fossil-fuel, Renewable, Demand-Side units, Aggregators
Transmission System Operator EirGrid SONI
Distribution System Operator ESB Networks NIE
Market Operator SEMO SEMO
Suppliers Electric Ireland, Airtricity, Bord Gais, Energia, Vayu, Pinergy, PrePayPower
Consumers Industry, Commercial, SMEs, Residential
Metered Data Provider MRSO NIE T&D


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1.1 Regulatory Authority

The Commission for Energy Regulation (CER)[3] is Ireland’s independent energy regulator. The CER was established in 1999 and its mission, acting in the interests of consumers, is to ensure that:

  • the lights stay on,
  • the prices charged are fair and reasonable,
  • the environment is protected, and,
  • energy is supplied safely.


1.2 Generators

Electricity generators are the first players in the chain, and they generate electric power from other sources of primary energy. Ireland sources electricity primarily from dispatchable fossil-fuel based power plants, and aims to increase the share of non-dispatchable renewable energy generation to 40% by 2020. Today, Ireland is heavily dependent on energy imports and in 2012 the nation imported 85% of its energy requirements in the form of fossil-fuels. Detailed information about the nation’s generation plants and forecast generation capacity for all types of power plants is available in the “All-island Capacity Statement 2014-2023” report from EirGrid[4].

1.2.1 Fossil-Fuel power plants

Most of Ireland’s electricity comes from coal, oil, gas and peat generation plants. Gas is the dominant fuel in Ireland, with about 60% of the nation’s electricity generated from imported natural gas. Ireland has one of the highest dependence on imported fossil fuels for electricity generation in Europe, as illustrated in the graph below.



Source: SEI, Understanding Electricity and Gas Prices in Ireland (Jan-June 2009)
With about 80% of electricity generation from imported fossil fuels, international fuel prices are nowadays the key driver of Irish generation costs and electricity prices.

1.2.2 Renewable Energy Sources

Ireland’s power grid is an island grid with very limited interconnection to the rest of Europe, meaning that Ireland cannot use supply from neighbouring countries and operates largely independently. As such, the policy environment has driven and accelerated the integration of renewable energy sources. The wind and wave power available on Ireland’s Atlantic coast offers one of the biggest renewable resources in the world, potentially exceeding the nation’s peak demand by 2,000MW.

The breakdown of renewable sources[5] in the Irish electricity market in 2012 shows that wind energy is the major source of renewable energy in Ireland:

Wind 19.5%
Hydro 3.1%
Landfill Gas 0.6%
Bio-Mass 0.5%


Ireland currently has 2,810 MW of installed wind capacity [6]. By 2020,  the installed wind capacity of Ireland and Northern Ireland as a percentage of the overall annual energy requirement will be higher than anywhere else in the world, with 37% of the island’s demand supplied by wind energy and 40% from renewable sources[7].

1.2.3 Demand Side Units and aggregators

A Demand Side Unit (DSU) is one or more demand sites that deliver a demand reduction when requested by the Transmission System Operator Control Centre[8]. A DSU is registered in the Irish electricity market and bids its demand reduction into the pool.

A demand site can become a DSU by itself (Individual Demand Site) or sign up with an aggregator (Aggregated Demand Site). If the intention is to export electricity to the system, an export capacity/exporting connection agreement is required.


1.2 Transmission System Operator

EirGrid[9] is the independent state-owned body licensed and regulated by the CER to act as transmission system operator (TSO) and is responsible for the operation, development and maintenance of the transmission system. EirGrid is responsible for operating the network of High Voltage Transmission lines and substations to transport power from the various electricity generators to locations where it is needed around the country. EirGrid is also the owner of the System Operator Northern Ireland (SONI)[10], the licenced TSO and market operator in Northern Ireland.

There is a legal agreement in place between EirGrid and ESB Networks, which sets down the terms under which ESB Networks provides infrastructure services to EirGrid. ESB Networks is licensed by the CER as the owner of the transmission system and is responsible for carrying out the maintenance and construction of the transmission system as per EirGrid requirements.


1.3 Distribution System Operator

ESB Networks[11] is also the licensed Distribution System Operator (DSO), and is responsible for building, maintaining, developing and operating the distribution network infrastructure. The electricity distribution network includes all distribution stations, overhead electricity lines, poles and underground cables that are used to bring power to Ireland’s 2 million domestic, commercial and industrial customers.


1.4 Metered Data Provider

ESB Networks takes the role of Metered Data Provider in Ireland in addition to being the licensed DSO. As the Meter Registration System Operator (MRSO)[12], ESB Networks install, maintain and read all electricity meters. ESB Networks are responsible for the Change of Supplier process and the processing/aggregation of meter data required to support Trading & Settlement in the competitive electricity market. The MRSO provides a central registration and data management services to the market. A central meter registration system is essential in order to associate each metering point with a Supplier. This ensures that each Supplier can be billed for the energy consumed by their customers and to ensure that Transmission and Distribution use of system charges can be calculated for the metering points for which each Supplier is responsible.


The MRSO provides a central registration process and data management services to support Trading & Settlement in the competitive electricity market. (Source [12])

1.5 Suppliers

There exist a number prerequisites to become a supplier or electricity and operate in the electricity retail market. An organisation must first obtain a “Licence to Supply Electricity” under Section 14 of the Electricity Regulation Act, 1999, under administration from the Commission for Energy Regulation[13]. Suppliers must afterwards become parties to the Trading and Settlement code[14] through registration with the market operator. The access to the transmission system is managed and administered by EirGrid through a Transmission Use of System (TUoS) agreement. Suppliers who have signed a TUoS agreement are required to comply with the Grid Code[15]. Similarly, access to the distribution system is managed and administered by ESB Networks through a DUoS agreement.

Currently, there are 5 active electricity suppliers in the retail business market: Electric Ireland, Bord Gais Energy, Airtricity, Vayu, and Energia. There and 6 active electricity suppliers in the retail domestic market: Electric Ireland, Bord Gais Energy, Airtricity, Energia, Prepay Power and Pinergy.


1.6 Market Operator

The Single Electricity Market Operator (SEMO)[16] facilitates the continuous operation and administration of the Single Electricity Market. The organization is managed as a contractual joint venture between EirGrid, the transmission system operator for the Republic of Ireland, and the System Operator for Northern Ireland (SONI). SEMO is licensed and regulated cooperatively by the Commission for Energy Regulation (CER) in Ireland and the Northern Ireland Authority for Utility Regulation (NIAUR)[17]. SEMO is also part of the EirGrid Group.




European electricity markets are based on common rules, but the trading arrangements can vary among different countries, due to:

  • Physical differences in the electricity generation structure and grid design;
  • Differences in the market concentration and the level of competition;
  • Differences in implementation of market components e.g. bidding procedures, pricing methods, and dispatching of power plants.


2.1 The Single Electricity Market

The Single Electricity Market (SEM) is the wholesale electricity market operating in the Republic of Ireland and Northern Ireland[16]. As a gross mandatory pool market operating with dual currencies and in multiple jurisdictions the SEM represents the first market of its kind in the world. The Single Electricity Market provides for a competitive, sustainable and reliable wholesale market in electricity aimed to deliver long-term economic and social benefits that are mutually advantageous to Northern Ireland and the Republic of Ireland. The market encompasses approximately 2.5 million electricity consumers, 1.8 million in the Republic of Ireland and 0.7 million in Northern Ireland.

SEM statistics[18] as of 2013:

  • Established in November 2007
  • € 3 Billion Annual Wholesale Market
  • 33 TWh Annual Consumption
  • 11 GW Registered Capacity
  • 76 Participants (Invoiced Entities)



SEM Market Overview (Source [18])

2.2 Generator bids

2.2.1 Traditional power plants

Electricity Generators, with over 10MW capacity, are obliged by law to sell electricity into this single pool for the island of Ireland. Bidding is regulated by a bidding code of practice[19], which states that Generators must sell electricity to the pool at the marginal cost of producing each unit of electricity (€/MWhr).

Potentially, a generator who sells directly to the wholesale pool market may receive the following payments[20]:

  1. Energy Payment- The market price per MW sold per half hour time slot.
  2. Capacity Payments – Compensation for being available to generate upon instruction from the grid operator.
  3. Constraint Payments – Compensation for being constrained from exporting scheduled amount of energy onto the system (due to grid stability issues).


Capacity payments are calculated based on the relatively low fixed costs of a peaking plant. As a result the payments generally cover only a portion of the fixed costs involved in building most plants. Suppliers also pay for these capacity payments and any other system charges, which are typically passed through to customers.

In order to sell electricity into the SEM pool, generators must submit cost bids to SEMO the day before the physical trade/generation takes place, known as D-1[21]. The bids submitted are primarily based on a generator’s running or Short Run Marginal Cost (SRMC), i.e. the cost of each extra MW it could produce excluding its fixed costs. The SRMC reflects the opportunity cost of the electricity produced, which is the economic activity that the generator forgoes to produce electricity. Generator bids also include a generator’s start-up costs, which are costs it faces if it needs to be turned on after a period of inactivity, as well as generator no-load costs which are (mostly fuel) costs which are indifferent to output levels.


2.2.2 Renewable Energy production

There are operational challenges involved in managing the high levels of non-synchronous, intermittent power of the type generated by wind farms and how to make renewables economically viable without subsidies, setting standards for new power generators, changing the pricing structure for generation and identifying investment gaps.

The current scheme in operation in the Republic of Ireland for the support of wind energy is REFIT[22], the Renewable Energy Feed-in-Tariff. This scheme provides a guaranteed reference price for renewable energy for the suppliers with an additional payment of 15% of the reference price.

The REFIT market support scheme is a complicated support system with potential administrative issues[23].  Under the terms of the Trading and Settlement Code[24], you are given two options if you are a generator with a wind farm and a maximum export capacity of less than 10 MW. You can either register your unit and sell your energy directly into the pool or you can enter into a contractual power purchase agreement (PPA) with an electricity supplier to sell the electricity to the pool on your behalf. When the generator enters into a power purchase agreement with a supplier all the sale and dispatch administration issues are managed by the supplier.  Since the REFIT provides a guarantee for the supplier of a certain price, this incentivises competition between the suppliers to enter PPAs with generators in order to benefit from the REFIT. In this way, those generators who just want to generate and receive a price for it can do so without having to be unnecessarily burdened with high-cost administration. This is a much more efficient system than requiring every generator in the country to deal with and finance such high-level administration.

Three REFIT schemes currently exist[25]:

  • REFIT 1  (Onshore wind, hydro and biomass landfill gas): The first REFIT scheme (‘REFIT 1’) was announced in 2006 and state aid approval was obtained in September 2007. The REFIT 1 scheme was open for applications until 31/12/09 and since that date, no new applications have been accepted, although projects accepted into the scheme before that date, which under the relevant legislation were granted an extension of time to become operational, continue to be developed.
  • REFIT 2 (Onshore wind, hydro and biomass landfill gas): was opened in March 2012. It is for projects built and operational between 1/1/10 and 31/12/15.
  • REFIT 3 (Biomass Technologies): was opened in February 2012. As REFIT 2 it is for projects built and operational between 1/1/10 and 31/12/15.


There is 1,380MW of REFIT renewable generation capacity supported in the 2012/2013 PSO decision: 55MW of REFIT 2 projects, 2MW of REFIT 3 projects, with the remainder in REFIT 1.


2.3 Market Schedule

Based on the set of generator costs received and on customer demand for electricity, the System Marginal Price (SMP) for each half-hour trading period is determined by SEMO, using a stack of the cheapest all-island generator cost bids necessary to meet all-island demand. More efficient generators are generally run to meet demand in the half-hour in what is known as the Market Schedule. The marginal generator needed to meet the demand sets the SMP for that trading period. The other generators who have submitted bids lower than this price are deemed to be in merit and will also be scheduled to run. The SMP for each half hour is paid to all generators that are needed to meet demand. All generators who have submitted a bid which is under the SMP earn a profit, known as inframarginal rent, on the difference between their bid offer and the SMP.  The average SMP is €60 MWHR, but in the first 30 months of SEM, the price fluctuated from a low of €3.29/MWHR to €696.85/MWHR[26].

Total customer electricity demand across the island normally varies with a noticeable trend throughout the day. It is usually lowest in the early hours of the morning and peaks generally between 17:00 and 19:00. The SMP follows this trend, as a more expensive stack of generators is needed to meet demand when it is high.


SEMO day-ahead market trading pricing plotting the System Marginal price against the forecast System Load Demand (Source [16])
As explained in [21], the generators can submit their bids to SEMO up until Gate Closure, currently at 10:00am on D-1. The software is then run by SEMO to determine a Market Schedule which forecasts the SMP for each half hour trading period for the following day. However no software can predict with complete accuracy what will happen in reality: real-time factors such as a change in wind generation or customer demand, which can affect SMP, must be accounted for. For this reason, SEMO completes two more software runs reflecting the reality of what actually happened in generator dispatch, one on the day after the trading day (D+1), and another four days after (D+4), to calculate the final SMP for each half hour of the trading day. This D+4 price is the one that is paid to generators and paid by suppliers.

Inframarginal rent is needed for most generators that are run, including efficient modern gas plants and wind farms, because while such plants have relatively low running costs, they have much higher fixed costs which the (relatively low) capacity payment does not fully cover. Without infra-marginal rent, it would not be economic to build modern efficient power plants or wind farms, threatening the security of electricity supply and driving higher prices in the long-run. Wind farms are an example of electricity generators that have very low SRMC, as the wind is free, and so typically they receive a higher rate of infra-marginal rent than other electricity generators, which in turn is needed to pay for their much higher fixed costs.


2.4 The Retail Market

The mandatory centralised pool model in SEM, in which all key generators and suppliers must participate, differs from most other European markets in which most trade takes place bilaterally between generators and suppliers. In these bilateral markets, only a residual amount of electricity is traded in an exchange, primarily for balancing purposes. In contrast, all key players must trade in SEM, so there is much more transparency associated with SEM prices and market outcomes.

Because electricity supply was fully deregulated in Ireland in 2011, customers can choose between suppliers who are free to compete with their own prices. Suppliers buy their electricity from the pool at the SMP common price. The market price (SMP) reflects the costs involved in generating electricity and accounts for roughly one-third of the price paid by final customers. Suppliers pay a fee to the TSO and DSO for its delivery to commercial and residential customers and to ensure that there is sufficient generation capacity (Capacity Charge). This appears as the TUoS and DUoS charges on the consumer’s final bill, which will typically account for one-quarter of the price paid by final consumers. The Market Operator Charge covers the cost of the SEMO in administering the market. The final element of the price paid by final customers is the cost to suppliers of supplying customers, which includes operations such as billing, accounting, administration, sales, and customer service and supplier margin. The Public Service Obligation Levy is a Government initiative related to purchasing certain required forms of electricity generation such as wind power or peat.


Breakdown of 2009/10 Regulated ESB Customer Supply Electricity Bills (the exact shares vary year from year) (Source [27])



One of the most important energy goals of the European Union is the creation of a functioning European single electricity market for electricity and gas, based on the EU Third Energy Package [28]. Free trade across borders and non-discrimination between internal and cross-border transactions are the foundations of the single market.

In Ireland and Northern Ireland the Department of Communications, Energy and Natural Resources (DCENR) and the Department of Enterprise Trade and Investment (DETI) respectively have charged the SEM Committee (SEMC) with responsibility for developing a new set of electricity trading arrangements that will meet requirements of the EU Target Model and deliver tangible short and long-term benefits to all island consumers by ensuring that existing and future assets and infrastructure are used in the most efficient ways to deliver electricity to consumers at the lowest cost[28].   This will impact on all participants in the market and will be implemented on the island of Ireland via the Integrated Single Electricity Market, henceforth I-SEM.

The Final Decision Paper on the High-Level Design of the new wholesale electricity market was published in September 2014[29]. In the current market organisation, all generators sell their output to the SEM, and a market price is settled afterwards. The new I-SEM market arrangements will require producers and consumers of electricity to forecast their generation and consumption and to bid at the price at which they are prepared to buy and sell. They will have to pay if they do not produce or consume what they predicted they would. Furthermore, market participants will not automatically qualify to receive capacity payments, and they will need to participate in the auction and bid successfully for that.

The I-SEM will replace existing wholesale electricity market arrangements on the island of Ireland in 2017. The I-SEM Project Team have now commenced work on the next phase of the project, which entails development of the detailed market design and its implementation, during which time stakeholder review groups will be established to facilitate industry engagement.

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Wattics has joined an international consortium of eight European organisations aiming to implement a new platform through which associations of small producers of “green” energy will be given the opportunity to participate to the energy networks of the future, thus contributing to the promotion of renewable energy sources and environmental conservation.

The VIMSEN consortium includes specialised partners from both the energy and ICT sector such as KEMA BV from the Netherlands, Public Power Corporation (PPC), COSMOTE, TELINT and CTI from Greece, Wattics from Ireland, INTELEN from Cyprus, and an association of four SEDINI municipalities from Italy.


[1] EU Directive 96/92/EC
[3] Commission for Energy Regulation website
[4] EirGrid All-Island Generation Capacity Statement 2014 – 2023
[5] The Electricity Association of Ireland, Sources of Renewable Energy
[6] Irish Wind Energy Association
[7] Ensuring a Secure, Reliable and Efficient Power System in a  Changing Environment.  EirGrid, Dublin, Ireland,
[8] EirGrid, Workshop presentation
[9] EirGrid website,
[10] System Operator of Northern Ireland (SONI) website
[11] ESB Networks website,
[12] Meter Registration System Operator (MRSO) website
[14] Sem-o
[15] Single Electricity Market Operator,
[16] Northern Ireland Authority for Utility Regulation (NIAUR)
[17] SEM Market Overview
[18] CER All-Island Project, Bidding code of practice, a Response and Decision Paper, 
[19] Irish Wind Energy Association,
[20] CER, Factsheet on SEM,

[21] Department of Communications, Energy and Natural Resources, REFIT Reference Prices
[22] Irish Wind Energy Association
[23] CER All-Island Project, SEM Trading & Settlement Code

[24] Department of Communications, Energy and Natural Resources, REFIT Reference Prices
[25] EA Ireland, SEM prices
[26] CER, Factsheet: Electricity Prices in Ireland
[28] CER All-Island Project

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