Competition and the single electricity market: Which lessons for Ireland?. (August 2016)

• Record Type: Journal Article
• Authors: Di Cosmo, Valeria; Lynch, Muireann Á.
• Is Part Of: Utilities policy. Volume 41(2016)
• Page Start: 40
• Page End: 47
• Publication Date: 2016-08
• Subjects: Competition -- Forward electricity markets -- Capacity payments -- European electricity market; Public utilities -- United States -- Periodicals; Public utilities -- Government policy -- United States -- Periodicals; 363.6
• DOI: 10.1016/j.jup.2016.05.002
• Languages: English
• ISSNs: 0957-1787

Abstract

Abstract: This paper examines the evolution of the Irish Single Electricity Market in order to comply with the European Target Model for electricity. In particular, this work focuses on the challenges raised by the high concentration in the generation sector of the Irish electricity market. We examine the theoretical and empirical conditions under which forward markets promote competition in the spot and retail markets. We also investigate the impact of market concentration on the new capacity payment mechanism. In order to ensure a competitive outcome for consumers, the regulatory authorities should promote competition in the forward market; moreover, the regulator should extend regulation to the price and quantity that the dominant firm bids for holding new reliability options. Highlights: We examine the implications of market concentration on redesign plans for the Irish electricity market. We find forward markets and interconnection are unlikely to underpin competition. We identify risks associated with the new capacity payment mechanism. We recommend regulation of costs and bids of the dominant firm in both energy and capacity markets.