The Capacity Remuneration Mechanism in the SEM

Fri Apr 04 15:42:50 EDT 2014
By Graham Shuttleworth, George Anstey, and Matthew Mair

On 5 February 2014, the Regulatory Authorities (RAs) of the all-island electricity market published a Consultation Paper laying out proposals to reform the Single Electricity Market (SEM). This Consultation Paper (the “SEM Consultation”) considers proposals to reform the nature and scope of energy trading arrangements within the SEM, and also reviews different options for reforming the Capacity Remuneration Mechanism (CRM) used to remunerate generating capacity.

In this report for Viridian, a NERA team considers the RAs' proposals to reform the CRM that currently applies throughout the all-island market. In particular, NERA was asked to consider the alternative options proposed by the RAs, and to address some specific questions about the design of CRMs in general.