Fight the power: CRU, Huntstown and the Appeal Panel

Lemme hear you say

The indirect impacts of last year’s capacity auction continue to come. An Appeal Panel has determined that the Commission for the Regulation of Utilities (CRU) erred in seeking to enforce a decision on licence changes relating to Huntstown power station. If implemented, they found that the licence changes would have forced Huntstown power station to operate at zero earnings or potentially a loss, without providing them some mechanism to manage their exit from the market. To quote the 4 July decision from the Appeal Panel: “In this case […] the CRU has effectively turned up the heat and locked the door of the kitchen.”

Huntstown Power Company Limited and Viridian Power Limited (collectively “Viridian”) appealed the CRU’s decision on changes to existing generator and supplier licences to implement the Integrated Single Electricity Market (I-SEM). They challenged it on several grounds, but the core focus of their appeal related to the Balancing Market (BM), cost-reflective bidding and the Capacity Market Code (CMC).

The link to the capacity auction arises from Huntstown 2 being unsuccessful in the first T-1 Capacity Remuneration Mechanism (CRM) auction. Viridian had announced its intention to close early as a result. However, the CRU was minded to enforce the Grid Code clause of three years’ notice being required to close a generation plant. As a result, Viridian could have found itself compelled to remain open and operating at a loss.

The Appeal Panel accepted that the licence decision would likely result in the closure of Huntstown 1 and 2. The decision cited Viridian’s assessment that this situation would have meant it generating power at a loss or at zero earnings, rendering the plant unfinanceable,  forcing them to impair the plant, and meaning they could neither service their debts nor undertake many operational and capital activities.

Related thinking

Announcement

The top 5 podcasts of 2020

We released 13 podcasts in 2020 covering all aspects of the energy market, from the Capacity Market and Electric Vehicles to Faster Switching and heat networks. Here are our top five podcasts of the year, ranked by the number of people who listened. 5. The Impact of COVID-19 on System...

Energy storage and flexibility

Network innovation: coordinating Active Network Management schemes and Balancing Services

The volume of generation connected to the distribution networks is increasingly rapidly. Cornwall Insight is part of a consortium developing an innovation project focusing on specific conflicts which this can create in the market, with the aim of developing learnings which can be applied in a broader context. Over 30GW...

Commercial and market outlook

Changes: how our Spectrum service is evolving

This article was originally published on 9 June 2020 in our ‘Energy Spectrum Ireland’ publication.  Since Cornwall Insight launched the Energy Spectrum Ireland Service in 2015, it has been providing insight on key developments in the energy markets in Ireland. With the macro market trends of decarbonisation, decentralisation and digitilisation,...

Energy storage and flexibility

CRU implements COVID-19 supply suspension scheme

On 1 May, the CRU set out the details of its decision to implement a temporary supply suspension scheme for eligible SME electricity and gas customers due to the impact of the pandemic. It said that the unique and extraordinary circumstances of the current situation require a modification to the current approach...

Low carbon generation

The Balancing Mechanism and BSUoS under lockdown

The COVID-19 pandemic and subsequent lockdown restrictions have severely impacted the GB energy market with demand and prices at record lows. As market conditions have drastically changed, National Grid Electricity System Operator (NG ESO) has been much in the spotlight, with the current low demand scenario providing new operational challenges....

Energy storage and flexibility

Turn it up – responding rapidly to manage the system

In balancing the system, we used to talk mostly about narrowing capacity margins and the need to ensure ‘headroom’. But suddenly there’s a greater need for greater consumption and the provision of ‘footroom’ during COVID-19, and potentially and also in the future. The ESO will need to procure more and...

Low carbon generation

Flexible Asset PPAs – more capacity, more competition

The Power Purchase Agreement (PPA) market for flexible assets in the last six months has both grown in size and seen increased levels of competition as new offtakers and optimisers make themselves known in the market. What do we mean by the PPA market for flexible assets? We mean the...

Net zero corporates and ESG

Editor’s Pick Ireland | Clean Energy Package: what does it really mean?

The Capacity Market Code removes or restricts payments to fossil fuel generators and allows cross border participation in Capacity markets, arising from the Clean Energy Package (CEP). We look at some of the other potential changes in the way EirGrid and SONI operate our energy system arising from the implementation of the...

This site is registered on wpml.org as a development site.