A quantitative analysis of the impact of wind energy penetration on electricity prices in Ireland

The maturity of wind technology combined with availability of suitable sites means Ireland is on course to generate 40% of its electricity from the wind by 2020. This work sets out to quantify, to what degree, if any, increased wind penetration translates into reduced wholesale and retail prices for electricity. The consensus from the literature is that increasing wind penetration reduces wholesale electricity prices, but views vary as to what degree this translates into reduced retail prices for the consumer. This work demonstrates the effect of wind energy penetration on the price of electricity in Ireland using quantitative data from the market and grid operators. An analysis of the data reveals that increasing wind penetration is having little impact on average prices. This work concludes that, due to the fact that imported UK gas powered generation is the main (48%) form of electricity generation in Ireland, the changes in Irish wholesale electricity prices are primarily determined by UK gas prices and that increases in wind penetration in recent years have not affected this relationship. This, and the presence of a minimum tariff received by producers, enables wind energy providers to compete on price, representing a sound commercial basis for investment in renewables, while continuing the trend of reduced, imported fossil fuel, dependence in Ireland. (C) 2014 The Authors. Published by Elsevier Ltd.