The introduction of I-SEM creates new challenges to wind farms in Ireland. Previously wind farms spilled their electricity into the SEM and were made whole through REFIT payments. The I-SEM introduces three markets through which wind farms can sell their electricity:
- The Day Ahead Market (DAM),
- The Intra Day Market (IDM) and
- The Balancing Market (BM).
The Department of Communications, Climate Action and Environment (DCCAE) have stated that REFIT payments to wind farms will be made on the assumption that each wind farm over 5MW in size will sell 80% of its electricity in the DAM and 20% in the BM (the figures are 70% and 30% respectively for wind farms under 5MW in size). REFIT payments will be made on this basis. This means that REFIT wind farms must now actively trade their electricity or risk reduced revenues.
CCL can provide a guarantee to trade a wind farm’s electricity across all the markets and pay the REFIT Reference Price; this completely mitigates the trading risk introduced by I-SEM. The guarantee provided will be underwritten with a significant credit rating that will provide comfort to funding institutions.