This report presents a deep dive into flexible generation in I-SEM, encompassing policy and regulation updates, market and technology overviews, DS3 forecasts, and investment case analyses.
Key messages from the report include:
- Slightly higher offshore wind generation and imports, relative to our June report, contribute to a higher SNSP forecast during the regulated arrangements period. This causes a breach in the DS3 budget cap in 2025 and triggers tariff revision
- During the regulated arrangements period, standard contract battery gross margins reach between €208-230/kW by 2025, depending on the battery duration
- Deployment of the full pipeline of battery storage projects could result in 2.4GW of battery capacity under standard contracts. This will increase total DS3 expenditure leading to more significant tariff revision and lower revenue by, on average, €116/kW/year during the regulated arrangements period
- Gas reciprocating engines could reach gross margins of over €140/kW in the mid-2020s, though lose out to long-duration batteries later in the horizon due to higher running costs
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