The cost of natural gas shortages in Ireland

Eimear Leahy, Conor Devitt, Sean Lyons and Richard Tol

Energy Policy, 2012, vol. 46, issue C, 153-169

Abstract: This paper investigates the economic implications of disruptions of one to ninety days to the supply of natural gas in Ireland. We assess the impact of a hypothetical gas supply disruption in both winter and summer in 2008 (with observed market characteristics) and in 2020 (with projected market characteristics). The cost of a natural gas outage includes the cost of natural gas being unavailable for heating and other purposes in the industrial and commercial sectors, lost consumer surplus in the residential sector, the cost of lost electricity in all sectors and lost VAT on the sale of gas and electricity. Ireland generates much of its electricity from natural gas and the loss of this electricity accounts for the majority of the cost of a natural gas outage. Losing gas-fired electricity would cost 0.1–1.0 billion euro per day, depending on the time to the week, the time of year and rationing. Industry should be rationed before households to minimise economic losses, but current emergency protocols do the opposite. If gas-fired electricity is unavailable for three months, the economic loss could be up to 80 billion euro, about half of Gross Domestic Product. Losing gas for heating too would add up to approximately 8 billion euro in economic losses. We also discuss some options to increase Ireland’s security of supply, and find that the cost is a small fraction of the avoided maximum damage.

Keywords: Security of supply; Value of lost load; Ireland (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421512002522
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Cost of Natural Gas Shortages in Ireland (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:46:y:2012:i:c:p:153-169

DOI: 10.1016/j.enpol.2012.03.047

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().