Bottlenecks at key border interconnectors are hindering the emergence of a fully fledged deregulated electricity market, one of the sector's largest independent players has warned.

New transmission lines are urgently required, especially along the Louth interconnector, which is crucial to the development of an integrated, 32-county, grid , said Mr Patrick Haren, chief executive of energy group Viridian.

"An integrated all-island market is vital," he told a meeting of Dublin Chamber of Commerce yesterday.

"It is now well understood that two small markets on one small island just cannot be efficient. Governments in both jurisdictions have given a strong commitment to the concept of an all-island market in energy but progress has not been as rapid as anyone would have liked to see."

Sub-standard infrastructure is causing a logjam at the Louth interconnector, which is able to import less than 30 per cent of its maximum capacity from the North, Mr Haren claimed.

Such a project would probably have to be initiated by the state-appointed Commission for Energy Regulation, in co-operation with the governments north and south.

Further market liberation is needed if new entrants are to be attracted, Mr Haren added.

"The shape of what is emerging looks good, but we must bring to bear the competitive pressures of the private sector to ensure that the electricity sector in Ireland is cost efficient. Whatever replaces the existing market must produce a better result for all participants if new investment is to come forward and customers are to see the benefits of real competition."

The electricity market is currently 40 per cent deregulated. Full deregulation will come into force in 2005.