Energy Institute

Why do we need interconnection between the Republic and Northern Ireland?

Connection of the two separate systems on the island of Ireland to create an all-island electricity market was intended to capture the benefits and economies of scale for customers. The Single Electricity Market (SEM) pools electricity from generators all over the island. It aims to reduce costs and therefore prices for consumers through increased competition between power generators, and to cut the cost of maintaining spinning reserve (power plants on standby) and other services.

Eirgrid has estimated the initial savings to consumers from the second north-south interconnector at €20 million a year, increasing thereafter to a potential €40 million a year 1. The interconnector will allow the lowest cost generators to produce power and replace higher-cost plants. Some currently idle power generators may operate more efficiently by selling their power to a larger market 2. Without the planned development to connect the north and south systems the all-island market will not operate effectively and Irish consumers’ north and south will incur higher costs, experience less competition and ultimately have to pay higher prices. Strong connections between the two jurisdictions enable some costs to be shared and create better conditions for competition with lower prices as the result. The interconnector with Britain has already reduced prices in Ireland by 9% 3.

The Single Electricity Market (SEM) works by pooling electricity from generators all over the country and electricity suppliers draw their requirements from that pool at the ruling price to meet the needs of their customers (Fig. 5).

Figure 5. SEM design

CER (2011) Factsheet on the Single Electricity Market. Available Online