The Effect of Increased Transmission and Storage in an Interconnected Europe: an Application to France and Ireland

Valeria Di Cosmo, Sean Collins and Paul Deane
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Sean Collins: MaREI Centre, Environmental Research Institute, University College Cork
Paul Deane: MaREI Centre, Environmental Research Institute, University College Cork

No 2017.37, Working Papers from Fondazione Eni Enrico Mattei

Abstract: A longstanding goal of the European Union (EU) is to promote efficient trading between price zones via electricity interconnection to achieve a single electricity market between the EU countries. This paper uses a power system model (PLEXOS-EU) to simulate one vision of the 2030 EU electricity market based on European Commission studies to determine the effects of a new interconnector between France and the Single Electricity Market of Ireland and Northern Ireland (SEM). We use the same tool to understand the effects of investment in storage, and the effects of the interaction between storage and additional interconnection. Our results show that both investments in interconnection and storage reduce wholesale electricity prices in France and Ireland as well as reduce net revenues of thermal generators in most scenarios in both countries. However, France is only marginally affected by the new interconnector. Renewable generators see a modest increase in net revenues. The project has the potential for a positive impact on welfare in Ireland if costs are shared between countries and remain below 45 million €/year for the scenarios examined. The owners of the new interconnector between France and SEM see increased net revenues in the scenarios without storage. When storage is included in the system, the new interconnector becomes less profitable.

Keywords: Interconnection; Renewable Generation; Storage (search for similar items in EconPapers)
JEL-codes: Q4 Q48 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-ene, nep-eur and nep-reg
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Working Paper: The Effect of Increased Transmission and Storage in an Interconnected Europe: an Application to France and Ireland (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2017.37

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