IDEAS home Printed from https://ideas.repec.org/p/esr/wpaper/wp452.html
   My bibliography  Save this paper

Irish and British Historical Electricity Prices and Implications for the Future

Author

Listed:
  • Deane, Paul
  • FitzGerald, John
  • Malaguzzi Valeri, Laura
  • Tuohy, Aidan
  • Walsh, Darragh

Abstract

This paper compares retail and wholesale electricity prices in SEM, the market of the island of Ireland, and BETTA in Great Britain. Wholesale costs are much lower in BETTA. We show that this is mostly because the wholesale price in BETTA is set too low to cover generation costs, although it is compensated by large retail margins. The substantial need for new investment in generation in Great Britain suggests that returns to generators will have to increase. Developing a market mechanism to compensate generators fairly while simultaneously reducing retail revenue will help in achieving this goal.

Suggested Citation

  • Deane, Paul & FitzGerald, John & Malaguzzi Valeri, Laura & Tuohy, Aidan & Walsh, Darragh, 2013. "Irish and British Historical Electricity Prices and Implications for the Future," Papers WP452, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp452
    as

    Download full text from publisher

    File URL: https://www.esri.ie/pubs/WP452.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2008. "Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets," American Economic Review, American Economic Association, vol. 98(1), pages 237-266, March.
    2. 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.
    3. Derek Bunn & Georg Zachmann, 2010. "Inefficient arbitrage in inter-regional electricity transmission," Journal of Regulatory Economics, Springer, vol. 37(3), pages 243-265, June.
    4. Seán Diffney & John Fitz Gerald & Seán Lyons & Laura Malaguzzi Valeri, 2009. "Investment in electricity infrastructure in a small isolated market: the case of Ireland," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(3), pages 469-487, Autumn.
    5. FitzGerald, John, 2004. "An Expensive Way to Combat Global Warming: Reform Needed in EU Emissions Trading Regime," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2004(1-Spring), pages 1-17.
    6. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide, 2009. "Recovery Scenarios for Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS007.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kerr, Niall & Gouldson, Andy & Barrett, John, 2017. "The rationale for energy efficiency policy: Assessing the recognition of the multiple benefits of energy efficiency retrofit policy," Energy Policy, Elsevier, vol. 106(C), pages 212-221.
    2. John Curtis, Valeria Di Cosmo, and Paul Deane, 2014. "Climate policy, interconnection and carbon leakage: The effect of unilateral UK policy on electricity and GHG emissions in Ireland," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    3. Upton, J. & Murphy, M. & Shalloo, L. & Groot Koerkamp, P.W.G. & De Boer, I.J.M., 2015. "Assessing the impact of changes in the electricity price structure on dairy farm energy costs," Applied Energy, Elsevier, vol. 137(C), pages 1-8.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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).
    3. repec:aen:journl:eeep4_1_valeri is not listed on IDEAS
    4. Bunn, Derek & Koc, Veli & Sapio, Alessandro, 2015. "Resource externalities and the persistence of heterogeneous pricing behavior in an energy commodity market," Energy Economics, Elsevier, vol. 48(C), pages 265-275.
    5. Lynch, Muireann Á. & Longoria, Genora & Curtis, John, 2021. "Future market design options for electricity markets with high RES-E: lessons from the Irish Single Electricity Market," Papers WP702, Economic and Social Research Institute (ESRI).
    6. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).
    7. Newbery, David M. & Greve, Thomas, 2017. "The strategic robustness of oligopoly electricity market models," Energy Economics, Elsevier, vol. 68(C), pages 124-132.
    8. Moritz Bohland & Sebastian Schwenen, 2020. "Technology Policy and Market Structure: Evidence from the Power Sector," Discussion Papers of DIW Berlin 1856, DIW Berlin, German Institute for Economic Research.
    9. Lucas W. Davis, Shaun Mcrae, and Enrique Seira Bejarano, 2019. "An Economic Perspective on Mexico's Nascent Deregulation of Retail Petroleum Markets," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    10. Rassenti, Stephen, 2009. "The strategic motive to sell forward: experimental evidence," UC3M Working papers. Economics we092616, Universidad Carlos III de Madrid. Departamento de Economía.
    11. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide & Znuderl, Nusa, 2013. "The HERMES-13 macroeconomic model of the Irish economy," Papers WP460, Economic and Social Research Institute (ESRI).
    12. de Bragança, Gabriel Godofredo Fiuza & Daglish, Toby, 2017. "Investing in vertical integration: electricity retail market participation," Energy Economics, Elsevier, vol. 67(C), pages 355-365.
    13. Pio Baake & Sebastian Schwenen & Christian von Hirschhausen, 2020. "Local Power Markets," Discussion Papers of DIW Berlin 1904, DIW Berlin, German Institute for Economic Research.
    14. Liski, Matti & Montero, Juan-Pablo, 2014. "Forward trading in exhaustible-resource oligopoly," Resource and Energy Economics, Elsevier, vol. 37(C), pages 122-146.
    15. Holmberg, Pär & Willems, Bert, 2015. "Relaxing competition through speculation: Committing to a negative supply slope," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 236-266.
    16. David P. Brown & Andrew Eckert & Douglas Silveira, 2023. "Strategic interaction between wholesale and ancillary service markets," Competition and Regulation in Network Industries, , vol. 24(4), pages 174-198, December.
    17. Jacqueline Adelowo & Moritz Bohland, 2023. "It’s in the Data – Improved Market Power Mitigation in Electricity Markets," EconPol Forum, CESifo, vol. 24(05), pages 46-51, September.
    18. Nancy L. Rose, 2014. "Learning from the Past: Insights for the Regulation of Economic Activity," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 1-23, National Bureau of Economic Research, Inc.
    19. Meredith Fowlie & Mar Reguant & Stephen P. Ryan, 2016. "Market-Based Emissions Regulation and Industry Dynamics," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 249-302.
    20. Trüby, Johannes, 2013. "Strategic behaviour in international metallurgical coal markets," Energy Economics, Elsevier, vol. 36(C), pages 147-157.
    21. Rubin, Ofir D. & Babcock, Bruce A., 2013. "The impact of expansion of wind power capacity and pricing methods on the efficiency of deregulated electricity markets," Energy, Elsevier, vol. 59(C), pages 676-688.

    More about this item

    Keywords

    SEM/BETTA/electricity prices/simulation model;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:esr:wpaper:wp452. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Burns (email available below). General contact details of provider: https://edirc.repec.org/data/esriiie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.