Energy Policy Research Centre

A major feature of the work of the Energy Policy Research Centre (EPRC) has been the development of key research infrastructure in the form of economic models for research. These models are used as the basic tool in much of the work undertaken by the EPRC and funded by its stakeholders (the EPRC is funded by a consortium of stakeholders in the energy area including the Department of Communications, Energy and Natural Resources).

Model development work included:

(a) The electricity model which covers the all-island electricity sector, modelling the dispatch of generating stations on a half hourly basis. It has been used in preparing forecasts and scenarios on energy use out to 2025.

(b) Developments of the HERMES, which included more detailed treatment of energy demand from the transport sector, were used to generate detailed forecasts for energy demand to 2025, which were published in the 2008 Medium-Term Review.  

(c) ISus, the satellite model of HERMES, used to forecast emissions and resource use, is being developed under funding from the Environmental Protection Agency (EPA), which has used it in its State of the Environment Report in mid-2008. This model relates economic activity to a range of emissions, including greenhouse gases.

(d) FUND, an integrated assessment model of climate change for analysis of international climate policy, is being used to advise the US EPA on climate policy. The model is also used to estimate the economic impact of climate change on Ireland, to simulate international trade in emission permits, and to investigate the implications of uncertainty about the carbon cycle. The research on this programme is funded by the Irish Environmental Protection Agency, the US Environmental Protection Agency and EPRI.

(e) HTM, a model of domestic and international tourism, is being used to estimate the impact of regulating aviation emissions, the EU-US Open Skies agreement, and for scenario studies of future aviation (as used in the latest MTR). This project is funded by the Environmental Protection Agency.  

Over the course of 2008 the EPRC examined a wide range of topics in energy, all of which are policy relevant for Ireland .

(a) Together with Sustainable Energy Ireland, the ESRI used the existing version of the HERMES macroeconomic model to prepare forecasts for energy use out to 2020. These forecasts are used by government departments and official bodies as part of their ongoing work on energy and the environment.

(b) Domestic and European climate policy formed a large component of research in 2008, with papers on a carbon tax ("The Distributional Implications of a Carbon Tax in Ireland"), alternative instruments for climate policy and EU emissions trade.

(c) Work on modelling energy use in transport was intensified with papers on car ownership (ESRI Working Paper No. 269), modal choice for commuting (ESRI Working Paper No. 268), the value of rail transport, aviation policy, and road freight (ESRI Working Paper No. 264).

(d) The number of fuel poor in Ireland was estimated and the determinants of the risk of fuel poverty were analysed.

(e) Research on the use of household appliances in Ireland was conducted and the implications for energy efficiency were examined.

The following is a list of research areas that will be examined over the course of 2009 and 2010.

(a) Energy demand - residential
Work on quantifying the impact of the Power of One campaign is being undertaken. In the context of the forthcoming Smart Metering pilot project we are assisting the CER in undertaking their work to assess the costs and benefits of this investment.

(b) Energy demand - manufacturing
The micro data from the Census of Industrial Production is currently being prepared in order to estimate the response of manufacturing sector firms’ energy use to changing prices and activity levels.

(c) Energy demand - transport
Research is ongoing on the modal choice of commuters, on projections of the home-work distances in the future, and on fuel tourism. We have constructed a model of the stock of cars by engine size and fuel type. Research into the implications of the electrification of road transport will be undertaken.

(d) Developing an Efficient Electricity System
The IDEM model of the electricity system has been applied to both the electricity system in Ireland and that in Great Britain. This model allows the examination of a range of issues that will impact on the future cost of electricity for consumers in Ireland.

• The first study using the model considered how enhanced interconnection between Ireland and Great Britain would affect competition in the Irish electricity system. A working paper on the results of this study is available (ESRI Working Paper No. 232).
• Work is under way to analyse the costs and benefits of different levels of renewables on the Irish electricity system in 2020. This study is also considering the impact of different levels of electricity interconnection between Ireland and Great Britain. This study is due for completion in 2009.
• The results from the study of wind and interconnection options indicate the importance of governance issues on any enhanced interconnection between Ireland and Great Britain. A separate study on economic governance issues on interconnection will be undertaken over the next two years.
• Work has commenced to develop a dynamic model to consider the appropriate long-term investment in electricity generation and how it will be affected by market structure and policy. This will look forward to 2025 and will be able to consider issues such as the electrification of transport. In developing this research the ESRI will consult with the Electricity Research Centre in UCD. As a starting point, an analysis of the alternative replacements for Moneypoint under a range of market conditions and climate policies is being undertaken.

(e) Security of supply
We published first estimates of the value of loss of load for Ireland. Further work is also planned to look at the wider issue of diversity of energy sources.

(f) Climate policy
The implications of the EU policy on greenhouse gas emissions targets will be further analysed. What potential is there in the scheme for countries to act strategically? To what extent can tax payers (and consumers) recover some of the value of the free permits? How will the availability of free permits affect new entry? To what extent is the size of the allocation of free permits important in affecting competition? How would an extension of the scheme to cover SMEs affect such companies? What is the effect of the priority dispatch for peat? What are the implications of flexibility in meeting the EU non-ETS targets? How should the market for non-ETS emission allocations be designed? Should CDM access rights be auctioned?

(g) ISus Sustainable Development Model
This model is being developed in conjunction with the EPA who are funding the project. This model has been used in conjunction with the HERMES based Medium-Term Review forecast to consider, inter alia, the implications of these forecasts for energy demand and for emissions to air associated with energy conversion and use.