Journal Article

Investment in electricity infrastructure in a small isolated market: the case of Ireland

Seán Diffney, John Fitz Gerald, Seán Lyons and Laura Malaguzzi Valeri

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 25, issue 3, pages 469-487
Published in print January 2009 | ISSN: 0266-903X
Published online January 2009 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/grp022
Investment in electricity infrastructure in a small isolated market: the case of Ireland

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Climate policy is driving an extensive deployment of wind generation in the Irish electricity market. This study evaluates the cost of increasing wind generation both to the system as a whole and to consumers for 2020. We consider different scenarios on fuel and carbon-dioxide permit prices and the extent of electricity interconnection with Great Britain. For a small and isolated electricity system such as Ireland, a high penetration of wind is economically sound only with increased interconnection to Great Britain, since wind generation would otherwise be curtailed. Not surprisingly, for low fuel prices the least-cost scenario contains low levels of wind generation whereas the opposite is true for high fuel prices. The findings highlight the importance of interconnection and its operation and governance.

Keywords: electricity; interconnection; Ireland; wind generation; L94; Q42; Q48

Journal Article.  9190 words.  Illustrated.

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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