Markets & Investment

The Single Electricity Market, which covers Northern Ireland and Ireland, went live on November 1st, 2007, and was recently re-designed to comply with the single European electricity market Target Model rules, which aim to harmonise trading across borders, making full use of interconnection, and in turn reduce electricity prices across Europe.  Over the last decade, the ‘synchronous’ all-island system has accommodated record levels of ‘non-synchronous’ generation, predominantly onshore wind.  The integration of the volumes necessary to meet our decarbonisation targets, will create further challenges for the all-island system and market.   The market design will need to evolve in order to incentivise and remunerate both new and existing investment in renewable energy, interconnection and also new and existing investment in the infrastructure that is required to support a system dominated by renewables and interconnection.

Electricity generation in Ireland is currently derived 50% from Gas, 30% from Renewables and the remainder mainly from coal. Whilst the relative proportions of gas to renewable energy are expected to reverse over the coming decades, Gas will continue to play a role in the transition to a low carbon economy as the lowest carbon producing fossil fuel and given the potential for renewable gas (such as Biomethane or hydrogen) to complement existing distribution and electricity generation infrastructure.

There are currently 5.7GW of Gas-fired CCGT on the island of Ireland, mostly built in the 00’s, and more recently, in 2013 SSE introduced one at Great Island in Wexford.  EAI contends that a significant proportion of this capacity will be required up to 2030, to maintain system frequency and meet the trend of rising demand which is expected to continue into the next decade as we electrify a wider proportion of the economy.  Beyond 2030, in order to meet a growing demand and wider decarbonisation objectives, the carbon emitted from gas fired generation will need to be clean[1]. To ensure that sufficient gas fired generation is operated and new gas fired CCS generation is built, Ireland needs to develop a holistic vision on the future role of gas-fired generation, that incorporates market, regulatory and policy developments.

Significant investment is required in order to decarbonise electricity generation in Ireland.  EAI/PWC recommend the following measures to deliver a 92% reduction in carbon emissions from Electricity generation by 2050.

Renewables

  1. Adopt measures to encourage wind turbine upgrades (repowering)
  2. Periodic review of offshore cost effectiveness
  3. Modest solar incentives
  4. Introduce incentives to encourage repurposing of low quality agricultural land to biomass production

Carbon Capture and Storage

  1. Investigate Government support for carbon leakage indemnity
  2. Introduce R&D tax credits/Innovation funding
  3. Commission wholesale electricity market design with CCS study

Gas Fired Power Production

  1. Revise electricity market design and regulation to ensure that sufficient gas fired generation is operated and new gas fired CCS generation is built.

Electricity Interconnection

  1. Develop effective regulatory and commercial models to encourage joint delivery of the target interconnector capacity;
  2. Consideration of potential joint ventures with investment partners in other countries.

 

[1] EAI/PWC 2017 4.7GW Gas with CCS in 2050