GREATER INTEGRATION with the European electricity market could help cut wholesale prices in the Republic, according to the latest assessment.
A report by Paul Gorecki, research professor with the Economic and Social Research Institute, to be published today, says that building more power lines between Ireland and Britain and Europe could boost competition, help guarantee security of energy supplies and contribute to cutting wholesale prices.
There is already one such power line, running between Co Antrim and Scotland, and a second link, between Co Meath and Wales, should begin supplying power next year.
Mr Gorecki’s report looks at the implications of building more interconnectors with Britain and the continent, and suggests that if there were more, and the Irish market were to become more integrated with the EU, then the gap in costs between here and countries such as Britain could narrow.
The power lines are designed to allow electricity to both flow into, and out of, the country.
As well as increasing competition, they would offer other benefits, such as cutting dependence on oil- and gas-fired generation, by offering power from sources such as hydro and nuclear generation.
The report states that they would also cut the need to keep expensive plants in reserve in order to guarantee security of energy supplies.
Irish electricity costs are among the highest in the EU. Figures in the report show that in 2010 industrial users in this country paid 8.60 cent a kilowatt hour – a basic unit of power consumption.
In Britain, they paid 8.53 cent, while in France, which has the cheapest electricity in the EU, they paid 5.70 cent.
Households paid more for every unit of power they used. In Ireland, the cost last year was 16.29 cent a kilowatt hour. In Britain, households paid 13.80, while in France, they paid 9.70.
The market has been fully deregulated this year, but most suppliers signalled that they would be raising their charges, as the cost of power generation, which is tied to oil and gas prices, has increased since January.
The report makes a number of assumptions. First, that more interconnectors will be built – Mr Gorecki says that costs may act as a barrier to this.
The second is that there is not a “major policy failure” in Britain causing a sharp increase in prices there. This could actually drive up Irish prices, as Britain could have to start importing power from here. The report’s author says that Britain has a “massive incentive” to avoid this problem.
The third is that EU legislation designed to produce a more integrated market is enacted here by 2016. The Government is understood to be working on this.
