ESB Annual Report 2012 - (Page 19)
BUSINESS
OVERVIEW
OPERATING &
FINANCE REVIEW
CORPORATE SOCIAL
RESPONSIBILITY
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
ESB Annual Report 2012 19
02
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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.
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04
02
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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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