Ireland's single electricity market needs to be seen to work if the country is to attract vital new investment into its energy market, an ESB executive has warned.

Bernard Byrne, the ESB's chief finance director, told a conference yesterday that the single market was the "only thing" that would drive investment in the new power plants needed to guarantee that the country has enough electricity in the future.

"If that market sends out the right signals, then the investment will take place," Mr Byrne said.

He added that the market needed to work over a long period of time, as power plants were designed to deliver returns over the long term.

The Republic's and Northern Ireland electricity markets merged last November. Under the system launched then, generators supply power into a common pool, from which it is purchased by suppliers, who then provide power to homes and businesses.

He said that another measure designed to open up the market, that was the number of undersea power lines connecting Ireland with other European countries, could also have an impact on investors' decisions.

He said the rate at which wind farms were coming on stream in Ireland, it would have the highest proportion of wind-generated electricity on its network of any European country. Ultimately, he said, wind could account for one-third of the network's capacity.

At the same time, State-owned ESB and Bord Gáis were building two 400MW gas-fired plants in Cork, while a number of private sector players, including the Quinn Group, were also moving into the market.

"There are 3,000mw-5,000mw being talked about," he said.

Gas-fired facilities are cheaper to build than offshore wind farms, partly because demand for turbines has driven up the capital cost of wind power.

Mr Byrne estimated that 500mw of offshore wind - the equivalent of an average-sized power plant - could cost up to €2 billion to build, while a gas-fired facility would cost one-quarter of this.