Calculating the fixed costs of a Best New Entrant Peaking Plant for the SEM

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Client Commission for Energy Regulation (CER), Ireland
Dates 2012
Sector(s)Energy
Service(s)Policy & Economics, Regulation & Competition

CEPA, along with its engineering partners, Parsons Brinckerhoff, advised the energy regulators on the island of Ireland on the fixed cost of a “best new entrant peaking plant” for the island’s Single Electricity Market (SEM). We advised the regulatory authorities on the calculation of fixed costs for the trading years 2010-2013, successfully winning the role as an advisor on three separate occasions. Our work involved identifying the generation technology that a new entrant focused on the peaking market would be likely to choose, assessing its fixed and operating costs, determining the costs of charges such as transmission and market operator charges, and combining this with an appropriate cost of capital to produce a single figure for the regulators. Our work was informed by consultations and working groups with the SEM Regulatory Authorities, system operators, generators and other market participants.

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