Energy Institute

Who should pay for interconnectors with other countries and why?

In principle, those countries that benefit from interconnection should meet the cost of providing it. Where the service is provided as a regulated investment, as it in Ireland, the interests of the electricity consumer require that the investment is, and is seen to be, both economically justifiable and sustainable.

In the case of Ireland’s interconnection with Britain, most of the benefits flow to Ireland because we are connected to a bigger market with cheaper prices that already supplies 8% to 10% of our annual electricity at lower prices. From a British point of view with its far bigger market, electricity coming from Ireland only accounts for a tiny percentage of its electricity consumption (1% of its total electricity imports 1) and therefore it is more likely to invest in interconnection to bigger electricity suppliers that could supply a greater proportion of Britain’s needs.

The Commission for Energy Regulation found that the East-West interconnector had improved the security of supply of electricity and broadened the electricity market for Irish consumers and generators 2. On average the interconnector reduced the system marginal price (SMP) by 8% during its first six months of operation.

However, it is not just the countries involved that foot the bill for interconnectors; the EU has provided direct grant and loan assistance to Ireland. The EU targets for interconnection between national electricity systems are 10% of average demand 3: With the East-West Connector in operation, that target of 10% has been met 4,5. This 500MW interconnector is publicly funded and owned by Eirgrid while the 250MW Moyle interconnector from Northern Ireland to Scotland was mutualised in 2003 and is effectively privately owned.

The EU aims to create a single electricity market across Europe and it contributed €110 million towards the cost of the East-West interconnector between Britain and Ireland 6. The EU provides funds, up to a proportion of the cost, for Projects of Common Interest (PCIs) to include interconnectors, gas pipelines, storage facilities and projects meeting co-operative energy demands. Ireland has several projects under consideration for funding under PCI supporting the move to an Integrated-Single Electricity Market. For a list of the latest projects see Table 1 below or visit the interactive map of EU PCIs.

Table 1. European PCIs involving Ireland

Number Project Detail
1.6. France – Ireland interconnection between La Martyre and Great Island or
1.9. Cluster connecting Ireland to the UK, including:
1.9.1. Interconnection between Wexford and Pembroke (Greenlink)
1.9.2. Interconnection between Coolkeeragh-Coleraine hubs and Hunterston Station,
2.13 Cluster Ireland – UK interconnections, including:
2.13.1 Woodland and Turleenan
2.13.2. Srananagh and Turleenan
5.1. Cluster to allow bidirectional flows from Northern Ireland to Great Britain and the Republic of Ireland and from the Republic of Ireland to UK, including:
5.1.1. Physical reverse flow at Moffat interconnection
5.1.2. Upgrade of SNIP pipeline to accommodate reverse flow between Ballylumford and Twynholm
5.1.3. Development of Islandmagee underground gas storage at Larne
5.3. Shannon LNG terminal and connecting pipeline
10.1 North Atlantic Green Zone Project – lowering wind curtailment by implementing communication infrastructure, enhanced grid control and interconnection and establishing (cross-border) protocols for Demand Side Management.