The October Revolution

It’s a year late but this October we will see a change in the way we buy and sell electricity on this island. It’s goodbye to the Single Electricity Market and hello to the Integrated Single Electricity Market. Energy nerds are greatly focused on the change. But should anyone else really be that bothered. The answer is that they should. 

I-SEM represents a radical upheaval in the way power is traded. Currently customers have no control over what they pay for wholesale supplies of electricity. Everyone, big and small, has to shell out the same single price. Of course retail prices are not identical even for electricity delivered at the same point in time. But the fact that rates can be very different is down to the application of the various charges, levies and fees that make up most of the bill.

With the October revolution however, suppliers will be able to decide which markets they want to bid into to secure the quantity of wholesale power they need to meet all their customers’ demands. Get it consistently right and they could save you money. Keep making the wrong calls and you could end up paying more depending on your contract. So the first thing you need to do is to assure yourself your supplier knows how to play this game.

But there’s scope for you to play an active role yourself. The electricity market loves flat loads. If you consume 10 megawatts all day every day, you’ll be very popular. But feeling appreciated is one thing, getting rewarded is another. Will you be able to get a discount for being boringly predictable. 

Here’s another thought. In theory all the dealing in the market should ensure proposed generation matches proposed consumption. But in the real world for one reason or another, the two can end up out of kilter. That mismatch becomes critical as the point of delivery looms. In the appropriately named balancing market the Transmission System Operator steps in to ensure demand equals supply. The TSO will seek bids and offers from suppliers and generators in order to close the the gap. This may result in high or low prices depending on whether the system is short of energy or in surplus. 

Herein lie opportunities to make a buck. What you have to be prepared to do is to switch off your power hungry machines if demand exceeds supply and sell your allocation back into the market at a high price. If on the other hand power is in surplus, there's the chance to get seriously cheap electricity. You might even get paid to absorb excess juice if prices go negative. But is your supplier ready to accommodate your willingness to wheel and deal in the balancing market.

Yes, all this is fairly tricky to get your head round. And believe me this summary is a very simplified snapshot of I-SEM. But that’s no excuse to sit on your hands. Get yourself informed.