A COMMON ELECTRICITY market in the EU could lead to higher energy prices for those of us in Ireland.
That’s according to the ESRI, whose latest report looks at “key challenges” in the energy sector.
The report, Irish Energy Policy: An Analysis of Current Issues, edited by John FitzGerald and Laura Malaguzzi Valeri, says that current EU proposals on electricity market reform “risk delivering significantly higher prices for Irish consumers”.
Professor FitzGerald pointed out that one of the major European Union policies is the drive to integrate European electricity markets.
“As a result, Ireland has to change the all-island electricity market to facilitate greater trade with its neighbours,” he said.
While the current proposals to change the market to meet EU requirements could result in greater trade, it could come at the cost of significantly higher prices in the domestic market, adding to the burden of consumers.
FitzGerald believes that the correct approach is to delay making a decision. He said that in conjunction with the EU, Ireland should look to identify a more appropriate model that will be likely to benefit consumers.
FitzGerald also said in the report that a major task for energy policy over the coming decade will be to deliver on the appropriate physical infrastructure so that policy objective can be met.
Key pieces include the North- South electricity interconnector; further interconnection between the Irish electricity system and the rest of Europe; and bringing the Corrib gas field into production, he said.
Wind farms
FitzGerald said that the extensive deployment of wind farms in Ireland has taken place after a major fall in the cost of the technology, and this minimises the cost for consumers.
“This lesson must be taken on board when considering the deployment of other new technologies, such as offshore wind and wave power,” he suggested.
In the report, Professor FitzGerald also said that a move towards more energy efficient products and processes should be encouraged. But he said that putting the onus on energy suppliers to deliver on this objective is likely to add to costs for consumers.
If subsidies are warranted, the state should provide them directly by targeting any specific failure of the market.
He also stated that job creation in the energy sector “is not, and should not be, the objective of energy policy”.
“Instead the objective should be to deliver a secure and environmentally friendly energy supply to Irish consumers at a minimum cost.”
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