We support the industry responses from WEI and EAI regarding this consultation. We have participated in the development of these responses.

Like those responses, we agree that the timeframe for modelling versus actual future system services need is confusing. The basis of the modelling does not show that the TSOs understand the future need necessary for the SEM as it progresses with a changing fuel mix, with different dispatch approaches (scheduling and dispatch delivery, Celtic go-live, emissions targets driving decarbonisation, offshore wind) and with increased SNSP. The starting point for the original DS3 is 40% SNSP which is now grossly underestimated. The TSO separately is reviewing a Grid Code requirement for fault ride through obligations for all demand facilities, but at the same time, has depressed DS3 tariffs on the basis of oversupply of system services (but still based on a 40% SNSP tariff calculation). The forecast in this paper does not consider these factors fully and does not model some of these sufficiently.

Volumes pre-DASSA (grid code, layered procurement, fixed contracts) is not quantified. This must be, in order to give an accurate picture of proposed forecast volumes in relation to proportion of volumes procured elsewhere. Market participants need to know which investment routes they are likely to target. On pre-DASSA volumes, the forecast methodology does not show a methodology for dealing with pre-DASSA volumes, or for situations that could become more prevalent in future (demand load reductions etc). The degree of over-procurement proposed cannot be understood in context without this additional detail of external factors or volumes that will drive DASSA related volume forecasts.

Market participants are being asked to make investment decisions for assets that need to be commercially viable for the next 15 years or more without this clarity of what areas of markets they are likely to target, what value they will likely earn and where their revenues can otherwise be secured if they are not successful in the DASSA day to day. Equally, existing units have still a period of years for investment recovery, the goalposts have necessarily changed but with no direction of procurement mechanisms to focus effort. This is not really factored in, as this would drive a detailed modelling approach.

The lack of clear view of other possible and likely reference incidents under-represents the amount of reserves that could be needed in future. It is mentioned that other reference incidents could include demand related events for instance, but no attempt has been made to show how this could impact a future forecast which is important to be able to model what likely volume trends could be for reserves into the future, with reference to the 15+ commercial viability timeframe.

Also, lastly, it is mentioned that LSI and LSO are the single focus, but what is not referenced anywhere is the impact of LOLE or reserve requirement, which we would assume brings with it an assumed baseline volume of reserves always needed to support these metrics and ensuring that LOLE for instance is achieved for the new 3 hours in ROI.

System Services High Level Design, notionally mentions a 40% volume to be procured through DASSA. We have mentioned before that this arbitrary proportion has not been confirmed is sufficient to meet the EU requirements for market-based procurement. The current forecast paper does not really reference this or other total volumes to be procured and also does not demonstrate it would be fit for purpose where all or the majority of reserves and/or other services could be procured via DASSA.

We also agree with the SEMC that the product review for reserves should have used EU standard products as the baseline and we would consider this now must be retrospectively reflected since otherwise, for future product reviews of other services, there will be inconsistent treatment and definition of products being procured.

The approach to this forecasting is similar to the approach in GB. However, the level of detail and granularity in the forecasting modelling and reporting in GB is far more defined, detailed and robust than what is proposed here. There is no coherence in this proposed forecasting approach compared to SOEF, GCS and TES ambitions and forecasts. There is also not a read across to resource adequacy, loss of load and demand loss. We know how much large energy demand will enter the island most likely, and that has been quantified by the TSO before, but the impact of this in reference incidents etc, is not considered or modelled to inform the future volumes forecast.

SOEF Markets – Future Arrangements for System Services – DASSA Volume Forecasting Methodology Consultation Paper - Submissions

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