Market Integration, Efficiency, and Interconnectors: The Irish Single Electricity Market

Abstract

Interconnections can be an effective way to increase competition in wholesale electricity markets in particular for smaller markets with few actors. This paper quantitatively examines the potentials for interconnections in the Irish Single Electricity Market (SEM). We use a time-varying Kalman filter technique to assess the degree of market integration between SEM and other large, mature and interconnected wholesale electricity markets in Europe. The results indicate a low degree of market integration between SEM and other European markets and thereby raising the possibility to benefit from increased electricity trade. As wholesale prices in SEM remain relatively high and volatile; a larger interconnector capacity can promote competition, close the gap with the European wholesale prices, improve security of supply, and mitigate price volatility. The results indicate that wholesale spot trading of renewable may not increase market integration. The results suggest that an interconnector capacity amounting to about 21% of generation capacity in SEM is likely to achieve an integration coefficient of 0.86 similar to what currently exists between the markets in Austria and the Netherlands.

A framework for establishing the technical efficiency of Electricity Distribution Counties (EDCs) using Data Envelopment Analysis

“…In 2008, it had 2.5 million electricity customers in total, 1.8 in ROI and 0.7 million in NI [16]. As a centralized gross mandatory pool, all electricity in SEM is traded through a market clearing mechanism based on generators bidding their Short Run Marginal Cost (SRMC) and receiving the System Marginal Price (SMP) [45]. The SEM is operated and administered by the Single Electricity Market Operator (SEMO), which is a contractual joint venture between Eirgrid and the Systems Operator for Northern Ireland (SONI), the transmission system operators in the ROI and NI respectively (both are Independent System Operators (ISO)).…”