Over July and August, the EAI submitted responses to two important consultations related to the market for system services: one on the DASSA Parameters & Scalars and the other on the DS3 Temporal Scarcity Scalar (TSS). Our focus has been on the transition away from the DS3 Regulated Arrangements to the Future Arrangements for System Services (FASS) however, with the postponement of the go-live date for the Day-Ahead System Services Auction (DASSA) to 2027, we have also delved into the current arrangements in place (DS3).
Changes to The Temporal Scarcity Scalar (TSS)
In July, EirGrid and SONI (the TSOs) released a consultation on proposed changes to the value of the TSS currently in place. For those unfamiliar with the TSS, this is a multiplicative factor used to adjust payments for system services in energy markets, particularly during periods of low supply or high demand. The intent of scalars such as this is to incentivise participants to provide system services when they are most needed. However, their use ultimately drives up costs.
The TSOs proposal is to remove the TSS for fast acting reserve products based on their analysis that shows that the market is currently operating at high SNSP levels (significant levels of renewable energy) and the excess volume of fast reserve service providers contracted means there is currently no scarcity for these services.
The EAI (many of whose members provide of these critical services) have carefully reviewed this proposal and the supporting analysis provided by the TSOs. While we recognise the importance of managing costs for consumers, we believe that the proposals to alter the TSS are premature and risk creating negative consequences for the market that outweigh any potential savings. The main takeaways from our response (linked below) are:
- We disagree with the assumption that the current high availability of these services will persist after fundamental market rules have changed. Particularly with the delay in the implementation of the SDP-02 Energy Storage Power Station (ESPS) integration from July 2025 to November 2025. We recommend the completion of a full impact assessment after the full implementation of SDP-02.
- The analysis does not consider the consequential impacts of this revenue change on the wider electricity market, as DS3 revenue is a critical component of a service provider’s business case.
- The analysis materially underestimates the commercial impact of the proposed changes.
- This change sends a disruptive signal to investors.
A decision on altering the TSS should be deferred to allow the market to operate under the new SDP-02 arrangements for a sufficient period to allow for a proper assessment of its impact on the availability of fast-acting services.
Future Arrangements for System Services: DASSA Parameters & Scalars
The design of the Day-Ahead System Services Auction (DASSA) is a critical step in the FASS programme and the proposals in EirGrid & SONI’s consultation on the parameters and scalars will have a significant impact on market efficiency, investor confidence, and ultimately, consumer costs. Our members are committed to providing significant resources to ensure the success of these arrangements.
Our main concern is the proposed DASSA Bid Price Cap. We fundamentally believe that price caps undermine the development of a truly competitive market for system services. They can distort price signals, suppress the true value of these essential services, and consequently fail to incentivise participation in the DASSA. The function of the price cap should be to protect consumers from extreme price events, not to act as a permanent feature of the market design.
Our response highlights our belief that a successful DASSA must be built on the principles of simplicity, transparency, and trust in competitive market outcomes.
If you wish to read our response to the consultation questions (including comments on bid floor prices and gate window opening times), you can find this linked below.
🔗20250822 Final EAI Response to EirGrid & SONI TSS Consultation.pdf
🔗20250725 Final EAI Response to EirGrid & SONI Consultation on DASSA Parameters & Scalars.pdf