A SINGLE EU electricity market could end up leaving Irish consumers facing extra costs, the Economic and Social Research Institute (ESRI) warns in a paper it is publishing today.
A Review of Irish Energy Policy says the all-Ireland electricity market, introduced in late 2007, is working well and concludes the price of electricity is about right as a result.
It points out the EU is moving rapidly towards an integrated electricity market, and warns such a development could create extra costs for Irish consumers.
The report’s author, John FitzGerald, says an integrated market will mean greater interconnection between the Irish and other European electricity networks. “The manner in which this investment in interconnection is financed and the rules under which trade will take place across the interconnectors need to be developed,” he says.
“There is a danger that EU rules could see Irish consumers paying for interconnection, which might end up raising their price of electricity.”
Mr FitzGerald said yesterday that Irish electricity prices, which are considered to be high, are “about right”.
He agreed that they are higher than in Britain because that country has more nuclear and coal-fired generation.
He explained that while researching the report, it emerged that prices in Britain are unsustainably low and are likely to increase in the near future as the industry will have to invest in new power plants.
The report advocates keeping the market supports that are currently available for onshore wind power.
These guarantee a minimum price for electricity generated by wind farms and supplied to the national grid.
However, it says that such supports should not be made available for offshore wind projects or wave or tidal power.
“It is premature to incentivise substantial investment in such technologies and it could prove very expensive for the Irish economy, while bringing little or no environmental benefits,” the report says.
Instead, it recommends making some State money available to fund further research in these areas.
The report also warns that bringing the Corrib natural gas field, which Shell is developing off the coast of Mayo, to production as quickly as possible is vital for future security of energy supplies. Gas is a key fuel for electricity generation.
The ESRI report points out that this would cost the taxpayer nothing, and it would reduce dependency on interconnection between Ireland and Scotland and other parts of Britain.
Assuming the field does come on stream, further natural discoveries off the Irish coast could actually result in a reduction in the cost of gas, the report states.
