ESRI study warns on European energy policy

Irish consumers face "significantly higher" prices for electricity due to efforts by the European Union to create a single European market for power, according to a study of the sector in Ireland by the Economic and Social Research Institute (ESRI).

John FitzGerald, the outgoing research professor of the institute, said Ireland should further delay entering the Single Electricity Market (SEM), and instead renegotiate with the EU for “a more appropriate model”.

A pooled market would result in rules requiring expensive integration between Ireland and the rest of Europe, the paper said.

Ireland only runs interconnectors to Northern Ireland and Britain but the ESRI said this integrated market would have to be redesigned for the SEM, spawning unnecessary costs for consumers.

Electricity grids

It also said the creation of SEM would require huge investment across Europe to connect the continent’s various electricity grids, and that Irish consumers would have to bear a portion of those costs.

"There is a risk the new regime could result in significantly higher prices for consumers. This would ... have serious consequences for Irish competitiveness and living standards," said the paper, edited by Mr Fitzgerald and Laura Malaguzzi Valeri of the institute.

Ireland and Northern Ireland already have a derogation from EU electricity integration rules until 2016, but the institute believes Ireland should seek a further delay.

The authors also warn against policymakers rushing into subsidising and deploying new electricity-generating technologies, such as offshore wind and wave power. “Moving new technologies from the research phase to the development phase before they are fully developed involves unnecessary expense for consumers,” said the institute.