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

34 Pages Posted: 13 Sep 2017

See all articles by Valeria Di Cosmo

Valeria Di Cosmo

Economic and Social Research Institute (ESRI); Fondazione Eni Enrico Mattei (FEEM)

Sean Collins

Investment Company Institute - Research

Paul Deane

University College Cork

Date Written: September 11, 2017

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

JEL Classification: Q4, Q48

Suggested Citation

Di Cosmo, Valeria and Collins, Sean S. and Deane, Paul, The Effect of Increased Transmission and Storage in an Interconnected Europe: An Application to France and Ireland (September 11, 2017). FEEM Working Paper No. 37.2017. Available at SSRN: https://ssrn.com/abstract=3035165 or http://dx.doi.org/10.2139/ssrn.3035165

Valeria Di Cosmo (Contact Author)

Economic and Social Research Institute (ESRI) ( email )

Whitaker square Sir john Rogerson's Quay
Dublin 2
Dublin
Ireland

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

Sean S. Collins

Investment Company Institute - Research ( email )

202-326-5882 (Phone)

Paul Deane

University College Cork ( email )

5 Bloomfield Terrace Western Road
Cork
Ireland

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