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The Likely Economic Impact of Increasing Investment in Wind on the Island of Ireland

Author

Listed:
  • Devitt, Conor
  • Diffney, Seán
  • FitzGerald, John
  • Lyons, Seán
  • Malaguzzi Valeri, Laura

Abstract

Like most countries Ireland faces the double target of decreasing emissions and keeping energy costs low to maintain competitiveness of the economy. The two goals are not always compatible. This study measures the effect of increasing wind in electricity generation on the total electricity costs for the Island of Ireland for the year 2020 under a variety of scenarios on fuel and carbon costs, generating plant portfolio mixes and electricity demand growth. We find that with high levels of interconnection 6000MW of installed wind capacity are likely to reduce overall costs, especially if the price of natural gas stays high. The sensitivity of the results to the level of interconnection suggests that it is important for interconnection to be operated and governed as efficiently as possible. We also find that the deregulated all-island system will face major challenges moving into the future since returns to traditional fossil-fuelled plants might not be sufficient to create new (needed) investment when wind penetration is high.

Suggested Citation

  • Devitt, Conor & Diffney, Seán & FitzGerald, John & Lyons, Seán & Malaguzzi Valeri, Laura, 2009. "The Likely Economic Impact of Increasing Investment in Wind on the Island of Ireland," Papers WP334, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esr:wpaper:wp334
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    File URL: http://www.esri.ie/pubs/WP334.pdf
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    References listed on IDEAS

    as
    1. Seán Lyons & Karen Mayor & Richard S.J. Tol, 2008. "Environmental Accounts for the Republic of Ireland: 1990-2005," Papers WP223, Economic and Social Research Institute (ESRI).
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Prime Time on the cost of wind
      by Richard Tol in The Irish Economy on 2010-12-15 14:36:03

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    Cited by:

    1. Di Cosmo, Valeri & Hyland, Marie, 2012. "The ESRI Energy Model," Papers WP424, Economic and Social Research Institute (ESRI).
    2. O'Mahoney, Amy & Denny, Eleanor, 2011. "The Merit Order Effect of Wind Generation on the Irish Electricity Market," MPRA Paper 56043, University Library of Munich, Germany.
    3. Di Cosmo, Valeria & Hyland, Marie, 2013. "Carbon tax scenarios and their effects on the Irish energy sector," Energy Policy, Elsevier, vol. 59(C), pages 404-414.

    More about this item

    Keywords

    electricity/growth/Interconnection/investment/Ireland/returns to investment/wind generation;

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