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Interconnecting an isolated electricity system to the European market: The case of Malta

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  • Ries, Jan
  • Gaudard, Ludovic
  • Romerio, Franco

Abstract

The long-term European Union (EU) energy policy increasingly requires member countries to reform existing power systems, including those of small island states. These are commonly isolated electricity systems that rely heavily on imported fossil fuels. Interconnections with mainland power systems are an alternative to offset the exposure to volatile fuel prices. This paper studies the 200-MW (MW) subsea transmission cable between the EU island member state of Malta and Sicily that was inaugurated on April 2015. Our main purpose is to examine whether and to what extent Malta's vulnerability to distinct oil price scenarios can be overcome with this new interconnector. We describe the process used to simulate the merit order for both Malta's isolated and interconnected electric generation setup. The algorithm used provides the average electricity spot price and economic scarcity rent of electricity imports and exports. The main finding is that the Malta-Sicily interconnector does not necessarily lower electricity prices for Malta's consumers. However, some scenarios, notably the incorporation of natural gas in Malta's future generation portfolio, achieve win–win situations for both consumer and supplier. The Malta case study shows that cable impacts depend on the installed generation capacity, oil price, and market design.

Suggested Citation

  • Ries, Jan & Gaudard, Ludovic & Romerio, Franco, 2016. "Interconnecting an isolated electricity system to the European market: The case of Malta," Utilities Policy, Elsevier, vol. 40(C), pages 1-14.
    • Handle: RePEc:eee:juipol:v:40:y:2016:i:c:p:1-14
    DOI: 10.1016/j.jup.2016.03.001
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    1. Noel Rapa, "undated". "The Macroeconomic Effects of Efficiency Gains in Electricity Production in Malta," CBM Policy Papers PP/05/2017, Central Bank of Malta.
    2. Gaudard, Ludovic & Madani, Kaveh, 2019. "Energy storage race: Has the monopoly of pumped-storage in Europe come to an end?," Energy Policy, Elsevier, vol. 126(C), pages 22-29.
    3. Sapio, Alessandro & Spagnolo, Nicola, 2020. "The effect of a new power cable on energy prices volatility spillovers," Energy Policy, Elsevier, vol. 144(C).
    4. Barrera-Santana, J. & Sioshansi, Ramteen, 2023. "An optimization framework for capacity planning of island electricity systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 171(C).
    5. Olivia Francesca B. Agua & Robert Joseph A. Basilio & Mc Erschad D. Pabillan & Michael T. Castro & Philipp Blechinger & Joey D. Ocon, 2020. "Decentralized versus Clustered Microgrids: An Energy Systems Study for Reliable Off-Grid Electrification of Small Islands," Energies, MDPI, vol. 13(17), pages 1-22, August.
    6. Rafal Weron & Florian Ziel, 2018. "Electricity price forecasting," HSC Research Reports HSC/18/08, Hugo Steinhaus Center, Wroclaw University of Technology.
    7. Aaron George Grech & Noel Rapa, 2019. "A reassessment of external demand’s contribution to Malta’s economic growth," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-13, December.
    8. Vijay, Avinash & Fouquet, Nicolas & Staffell, Iain & Hawkes, Adam, 2017. "The value of electricity and reserve services in low carbon electricity systems," Applied Energy, Elsevier, vol. 201(C), pages 111-123.
    9. Papadopoulos, Agis M., 2020. "Renewable energies and storage in small insular systems: Potential, perspectives and a case study," Renewable Energy, Elsevier, vol. 149(C), pages 103-114.
    10. Sapio, Alessandro, 2019. "Greener, more integrated, and less volatile? A quantile regression analysis of Italian wholesale electricity prices," Energy Policy, Elsevier, vol. 126(C), pages 452-469.
    11. Gaudard, Ludovic & Avanzi, Francesco & De Michele, Carlo, 2018. "Seasonal aspects of the energy-water nexus: The case of a run-of-the-river hydropower plant," Applied Energy, Elsevier, vol. 210(C), pages 604-612.

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