D(elay)S3 System Services 23 Mar 2017

An information paper on the future of DS3 System Services was published on the 23rd of March, by the SEM Committee shedding light on the particularly cloudy future of the DS3 System Services programme in Ireland. 

The paper outlines how the regulated tariff system will stay in place until at least 2019 with 107 existing DS3 Interim Arrangements framework agreements to be extended until April 2018, falling into place with I-SEM timelines. 

A "glide path", or stepped approach is to be implemented to dictate the potential price cap for each tariff year, with the actual tariffs to be based on annual calculations of system services volumes required and forecast system need.

2016 - €75m

2017 - €115m

2018 - €155m

2019 - €195m

2020 - €235m

A panel based procurement approach will be designed in the absence of an enduring competitive approach allowing more flexibility to new participants who may have a chance to enter the programme every 6 months.

The results of the qualification trials are expected to provide entry signals for new technologies but while the first panel based procurement exercise will take place in Q4 2017, the new fast services (FFR, FPFAPR and DRR) will be procured separately in Q2 2018.

This recent delay sets the high level design decision of a competitive auction for procurement of system services back another year from the original go live of October 2017. While this hybrid regulated approach may provide some immediate certainty in the face of a significantly changing electricity and capacity market in Ireland, it moves away from the recommended guidelines published in the EU Third Energy package requiring balancing services to be procured as close to real time as possible. With no mention of long term contracts and no price competition it is difficult to see what real changes have been implemented in the transition from the old HAS arrangements. Some may view this as a missed chance for Ireland to become a world leader in this space, with another commissioned jurisdictional review looking at international best practices to be completed at the end of 2017, three years after the last one.