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The Effect of REFIT on Irish Electricity Prices

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  • Devitt, Conor
  • Malaguzzi Valeri, Laura

Abstract

This paper evaluates the likely effect of REFIT, the Irish scheme to support renewable electricity generation, on the wholesale price of electricity. The cost of REFIT is passed on to Irish consumers. Here we calculate that when there are 4071MW of on-shore wind in the Republic of Ireland the cost of the REFIT scheme is between 5 per cent and 10 per cent of the gross wholesale price of electricity. Off-shore wind has higher levels of support than on-shore wind, as do technologies that are still in development such as wave and tidal. When off-shore wind, wave and tidal are added to the system, the cost of REFIT increases significantly. We argue that wave and tidal should be sustained with a different scheme that provides capital grants, and that off-shore wind that is channelled to exports should not be supported by Irish consumers.

Suggested Citation

  • Devitt, Conor & Malaguzzi Valeri, Laura, 2011. "The Effect of REFIT on Irish Electricity Prices," Papers WP374, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esr:wpaper:wp374
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    References listed on IDEAS

    as
    1. Butler, Lucy & Neuhoff, Karsten, 2008. "Comparison of feed-in tariff, quota and auction mechanisms to support wind power development," Renewable Energy, Elsevier, vol. 33(8), pages 1854-1867.
    2. Graves, Frank & Litvinova, Julia, 2009. "Hedging Effects of Wind on Retail Electric Supply Costs," The Electricity Journal, Elsevier, vol. 22(10), pages 44-55, December.
    3. Huber, Claus & Ryan, Lisa & O Gallachoir, Brian & Resch, Gustav & Polaski, Katrina & Bazilian, Morgan, 2007. "Economic modelling of price support mechanisms for renewable energy: Case study on Ireland," Energy Policy, Elsevier, vol. 35(2), pages 1172-1185, February.
    4. Denny, Eleanor, 2009. "The economics of tidal energy," Energy Policy, Elsevier, vol. 37(5), pages 1914-1924, May.
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    Citations

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    Cited by:

    1. Di Cosmo, Valeria & Malaguzzi Valeri, Laura, 2014. "The incentive to invest in thermal plants in the presence of wind generation," Energy Economics, Elsevier, vol. 43(C), pages 306-315.
    2. Gorecki, Paul K., 2011. "The Internal EU Electricity Market: Implications for Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS23.
    3. Malaguzzi-Valeri, Laura & di Cosmo, Valeria, 2014. "The Effect of Wind on Electricity CO2 Emissions: The Case of Ireland," Papers WP493, Economic and Social Research Institute (ESRI).
    4. Farrell, Niall & Donoghue, Cathal O’ & Morrissey, Karyn, 2015. "Quantifying the uncertainty of wave energy conversion device cost for policy appraisal: An Irish case study," Energy Policy, Elsevier, vol. 78(C), pages 62-77.
    5. Niall Farrell, Mel T. Devine, William T. Lee, James P. Gleeson, and Sean Lyons, 2017. "Specifying An Efficient Renewable Energy Feed-in Tariff," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    6. Farrell, Niall & Lyons, Seán, 2014. "The distributional impact of the Irish public service obligation levy on electricity consumption," MPRA Paper 53488, University Library of Munich, Germany.
    7. Curtis, John & Devitt, Niamh & di Cosmo, Valeria & Farrell, Niall & FitzGerald, John & Hyland, Marie & Lynch, Muireann & Lyons, Sean & McCoy, Daire & Malaguzzi Valeri, Laura & Walsh, Darragh, 2014. "Irish Energy Policy: An Analysis of Current Issues," Research Series, Economic and Social Research Institute (ESRI), number rs37 edited by FitzGerald, John & Malaguzzi Valeri, Laura.
    8. Devine, Mel & Farrell, Niall & Lee, William, 2014. "Managing investor and consumer exposure to electricity market price risks through Feed-in Tariff design," MPRA Paper 59208, University Library of Munich, Germany.

    More about this item

    Keywords

    feed-in targets/Ireland/Renewable electricity;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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