The single electricity market on the island of Ireland, introduced in 2006, was designed to reduce the cost of electricity for all consumers and to increase the security of supply, North and South.
It is probably the most effective all-island institution in operation, one which has developed to date with a minimum of fuss. It has delivered clear benefits for those living in both parts of the island. It involves a common wholesale electricity market, and the co-ordinated dispatch of all electricity generation on the island.
However, the future of this integrated market could be affected, not because of Brexit, but rather because of the Republic’s failure to build additional interconnection between the North and the South to guarantee a secure electricity supply for consumers on either side of the Border.
In the early days of the single electricity market, the Republic benefited from surplus electricity generation capacity in Northern Ireland. Today, following the closure of old plant in the North, it is the South which is exporting its surplus electricity northwards. However, both sides benefit from the greater security of supply which an all-island market brings.
Another key benefit is lower electricity prices than if the systems were not integrated. Though the wholesale price for electricity is higher in Ireland than in Britain, the retail margin for households is significantly lower in Ireland. This is because, unlike in Britain, the single market market structure prevents dominant companies, such as the ESB, from exerting undue market power to the detriment of consumers.
Dominant firms
In Britain, by contrast, dominant firms are able to prevent new generation companies entering the market and are able to charge excessive margins to consumers.
The single market currently relies on a single set of high-voltage wires to connect the two systems North and South. This was out of action from the 1970s to the 1990s due to IRA bombings.
While returned to working order after the Good Friday Agreement, this single interconnector is inadequate to allow major power flows between the South and the North. A second set of high voltage wires is urgently needed to enhance security of supply. It is currently the North that is most at risk of the lights going off due to lack of interconnection capacity.
Another benefit of a second interconnector would be to reduce the cost of electricity on the island: a 2013 ESRI study suggests potential annual savings of about €30 million, or about 1 per cent off the retail price.
A new interconnector would also reduce the combined emissions of greenhouse gases on the island due to the more efficient use of the stock of electricity generation.
There is significant local opposition to building the second interconnector. Inadequate local consultation has played a part, along with fears about significant visual impact on the route, and sterilising land use along the immediate corridor.
Local campaigners have argued that the interconnector should be put underground. An independent study carried out in 2009 showed that while the overground option would, at that time, cost under €100 million, undergrounding would cost an additional €500 million – an additional €200 per Irish household.
Voltage instability
Nowhere in the world has it proved technically possible to put such a long 400KV alternating current (AC) cable underground over such a distance. When such a cable is placed underground voltage instability grows with the length of the cable, requiring the use of equipment at ground level every few kilometres to maintain stability.
As a result the only feasible underground option would be to use a direct current (DC) cable. Apart from the huge additional cost of undergrounding, this would involve major converter stations at each end 12 stories high.
In addition, the switch between alternating current and direct current would mean the Northern and Southern systems would still not be properly linked. Because of the complex electronics needed to align the two separate systems, an underground DC interconnector would also be less reliable.
Of course, those who are living along the immediate route should receive fair compensation for any restriction on land use, and other disamenity. However, the social benefits of a second interconnector far outweigh the costs to those immediately affected.
It is in the overall public interest to proceed with the project. The debate on alternatives needs to get real, and recognise the technical and financial constraints to an underground solution. Then realistic discussions can begin on what would constitute a fair compensation package for those immediately affected.
