EA Ireland

Is this not a problem with the electricity market then?

No, the electricity market, which is based on a merit order and marginal pricing system has been designed to European standards and has unlocked major benefits for consumers. The market design is based on the principal that the highest cost generating unit that gets selected (dispatched) to meet demand sets the price for all the other cheaper units that are also dispatched. This high-cost unit is generally a gas plant with high marginal costs.


In 2021 alone, ACER (the European Union Agency for the Cooperation of Energy Regulators) estimated the benefits of cross-border trading to amount to 34 billion euros due to increased dispatch efficiency. It is worth noting that more than a third of these benefits were delivered in the last quarter where energy prices were highest. They also found that the current market design significantly reduces short-term market volatility and estimated that the price volatility would have been around seven times higher in 2021 if national markets had been isolated.


This is a competitive market and prices go down as well as up. In 2020[1]  the Commission for the Regulation of Utilities reported that gas generation in Ireland posted a net margin loss of

6% and that the average cost per MWh of electricity sold was steady at €77/MWh in FY2020, not changing significantly from FY2019 (see appendix 1).


The EU Commission also had asked ACER to complete a review of the Electricity Market and they concluded their work[2] in May 2022 indicating that:


  • whilst the current electricity market design is worth keeping, some improvements will prove key for it to deliver on important challenges, including:
    • Making short-term electricity markets work better everywhere
    • Driving the energy transition through efficient long-term market
    • Increasing the flexibility of the electricity system

[1] https://www.semcommittee.com/sites/semc/files/media-files/SEM-22-021%20Generator%20Financial%20Performance%20for%20FY2020%20Report.pdf

[2] https://www.acer.europa.eu/events-and-engagement/news/press-release-acer-publishes-its-final-assessment-eu-wholesale#:~:text=Overall%2C%20ACER%20finds%20that%20whilst,through%20efficient%20long%2Dterm%20markets