ESB Annual Report 2012 - (Page 19)

BUSINESS OVERVIEW OPERATING & FINANCE REVIEW CORPORATE SOCIAL RESPONSIBILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS ESB Annual Report 2012 19 02 01 OPERATING & FINANCE REVIEW OPERATING ENVIRONMENT OVERVIEW OF THE ELECTRICITY MARKETS IN THE REPUBLIC OF IRELAND AND NORTHERN IRELAND The structure of the electricity market in the Republic of Ireland (ROI) and Northern Ireland (NI) can be divided into four segments: generation, supply, transmission and distribution. Electricity generation and supply are open to full competition throughout the island of Ireland. Electricity transmission and distribution are regulated monopolies in each of ROI and NI. Energy Policy and Regulation Energy policies and energy affairs are managed through the Minister for Communications, Energy and Natural Resources in ROI and the Department of Enterprise, Trade and Investment in NI. Energy policy and regulation are heavily influenced by European Union law. The Commission for Energy Regulation (CER) is the independent regulator of the energy markets in ROI. The Northern Ireland Authority for Utility Regulation (NIAUR) is the independent regulator of the energy market in NI. OVERVIEW OF SINGLE ELECTRICITY MARKET ESB IG Distributed Generatiors Independant Wind Northern Ireland Republic of Ireland Distributed Generators VPE BGE Competitive Generation Transmission Regulated Monopoly Activities TSO Distribution Tynagh, EPL, Aughinish Airtricity ESB International ESB Networks Transmission AES (Kilroot Ballyumford) SSE (Airtricity) Transmission NIE SONI SEM Pool EirGrid ESB Networks Distribution Distribution Northern Ireland Republic of Ireland NIE Single Electricity Market (SEM) The SEM is the single wholesale market (pool) for electricity in ROI and NI. Virtually all electricity generated in, or imported into the market must be sold, and from which all wholesale electricity consumed in, or exported from the market must be purchased. The pool sets the spot price for electricity, known as the system marginal price (SMP) every half hour. Generators also receive separate payments for the provision of stable generation capacity through the capacity payment mechanism. Price volatility in the pool is managed by generators and suppliers by entering into fixed financial contracts (contracts for differences). The SEM came into operation on the island of Ireland in November 2007. It is operated by the Single Electricity Market Operator (SEMO). SEMO is a joint venture between EirGrid plc (EirGrid), the transmission system operator for ROI, and SONI Limited (SONI), the transmission system operator for NI. SEMO is licensed and regulated cooperatively by the CER and the NIAUR. Electricity Networks The electricity transmission system is a high voltage network for the transmission of bulk electricity supplies. The distribution system delivers electricity to individual customers over the medium/low voltage networks. Two entities, ESB Group and Eirgrid Group, own and operate the electricity networks on the island of Ireland respectively. Interconnection with Other Networks For geographical reasons, the electricity transmission systems on the island are isolated compared to systems in mainland Europe and in Great Britain. The Moyle Interconnector links the electricity grids of NI and Scotland through submarine cables running between converter stations in County Antrim, Northern Ireland and Ayrshire in Scotland. The link has a capacity of 500 MW. The East- West Interconnector links the electricity transmission system in ROI to the electricity transmission system in Great Britain, enabling two way transmission of electricity. The East-West Interconnector runs between Deeside in north Wales and Woodland, County Meath in ROI. Approximately 260km in length, the underground and undersea link has the capacity to transport 500 MW – enough energy to power 300,000 homes. Electricity Generation SSE (Airtricity) ESBIE Power NI Energia The SEM generation sector comprises approximately 10,400 MW of capacity connected to the system on an all-island basis. The capacity connected to the system includes a mix of older generation plants alongside modern combined cycle gas turbine (CCGT) plants and renewable energy sources such as wind power. These stations generate electricity from fuels such as gas, coal and oil as well as indigenous fuels including hydro, wind, peat and biomass. The Government has set a target for 40% of electricity to be generated from renewable resources by 2020. Electricity Supply Electric Ireland Energia SSE (Airtricity) BGE Competitive Supply The liberalisation of the electricity market began in February 2000, with a 28% market opening, allowing major consumers of electricity to select a supplier of their choice. A second phase brought market liberalisation to most non-domestic customers. Full market opening to all consumers occurred in February 2005. 05 04 02 03

Table of Contents for the Digital Edition of ESB Annual Report 2012

ESB Annual Report 2012
Contents
Business Overview
Chairman’s Statement
Chief Executive Review
Our Strategy and Business Model
Operating and Financial Review
Operating Environment
Finance Review
Business Unit Sections: ESB Generation and Wholesale Markets
ESB Networks
NIE
Electric Ireland
Corporate Social Responsibility
Introduction from Executive Director, People and Sustainability
Sustainability Charter
Energy Usage 2012
ESB Innovation
Equality and Diversity
Our People
Our Community
Corporate Governance
Chairman’s Corporate Governance Statement
The Board
Executive Team
Board Members’ Report
Risk Management Report
Statement of Board Members’ Responsibilities
Independant auditor’s report to the stockholders of Electricity Supply Board (ESB)
Statement of Accounting Policies
Financial statements
Prompt Payments Act

ESB Annual Report 2012

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