Sir, – Your editorial of November 2nd (“The Irish Times view on energy prices: a market that makes little sense”) highlighted the importance of energy market design in ensuring a secure transition to a lower carbon future. EU electricity market design is indeed complex, and system marginal pricing is one aspect that has come under increasing scrutiny in light of decarbonisation and dealing with the fallout of the Russian invasion of Ukraine.
System marginal pricing can have benefits, for example, in providing customers with price signals to reduce electricity consumption at times when renewable generation is low and prices are higher, or conversely to shift electricity demand to times of high renewable generation when prices are lower. In addition, newer renewable generators will return money to customers when the system marginal price is high, as we saw for the first time this year as the public service obligation levy returned money to customers.
However, there is growing recognition that the EU electricity market design needs to be reformed to facilitate a high renewable electricity market. Ireland is a leader in the EU in integrating renewables into the electricity system and should also provide a leading voice on this market redesign work. This is a complex process as we must also ensure sufficient back-up generation for those days (or weeks) of peak winter demand which may also have very low solar or wind generation.
The transition to a lower carbon energy system will not be costless. The Commission for Regulation of Utilities (CRU) recently highlighted future cost drivers in its retail energy market review, published on cru.ie. In particular, future market design must ensure that Ireland can deliver the urgently needed multi-billion euro investments in system services, renewable and back-up generation to ensure we meet increasing demand and achieve our decarbonisation goals.
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The CRU is currently working on an ambitious energy demand strategy which will help decarbonise future economic growth and enable active customers to lower their bills by behaving more flexibly with their demand. We also recognise the need to protect more vulnerable customers, and to ensure that all customers benefit from a low-carbon transition. This week, the CRU is hosting the European Commission’s Citizen Energy Forum in Dublin to discuss how we both protect and empower customers, in the context of transforming energy markets. – Yours, etc,
AOIFE MacEVILLY,
Commissioner,
Commission for Regulation of Utilities,
Dublin 24.
