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Goldilocks and the Three Electricity Prices: Are Irish Prices "Just Right"?

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

Abstract

In this paper we analyse the 2008 electricity price in the Irish All-Island Market. We test whether this price is 'efficient' by comparing it to the electricity price in Great Britain. This analysis suggests that around ?16 per MWh of the difference in wholesale prices between Ireland and Britain is due to differences in generating technology. The new wholesale electricity market for the island of Ireland appears to be working well ? it is producing a wholesale price that approximates the long run marginal cost that would apply in a large liquid competitive market. In the British market the wholesale price appears to be below the long run marginal cost of producing electricity. Retail margins in Great Britain are high, especially for households. Only some of this margin compensates vertically integrated utilities for the low wholesale price. In the Republic of Ireland the retail margin was probably also higher than it should have been.

Suggested Citation

  • Devitt, Conor & Diffney, Seán & FitzGerald, John & Malaguzzi Valeri, Laura & Tuohy, Aidan, 2011. "Goldilocks and the Three Electricity Prices: Are Irish Prices "Just Right"?," Papers WP372, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp372
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    References listed on IDEAS

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    Cited by:

    1. Paul Deane, John FitzGerald, Laura Malaguzzi Valeri, Aidan Tuohy and Darragh Walsh, 2015. "Irish and British electricity prices: what recent history implies for future prices," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    2. O'Mahoney, Amy & Denny, Eleanor, 2013. "Electricity prices and generator behaviour in gross pool electricity markets," Energy Policy, Elsevier, vol. 63(C), pages 628-637.
    3. repec:aen:journl:eeep4_1_valeri is not listed on IDEAS
    4. Gorecki, Paul K., 2011. "The Internal EU Electricity Market: Implications for Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS23, June.
    5. McInerney, Celine & Bunn, Derek, 2013. "Valuation anomalies for interconnector transmission rights," Energy Policy, Elsevier, vol. 55(C), pages 565-578.

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    electricity/Ireland/cost/Republic of Ireland;

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