Energy

The energy unit at the ESRI works together with the Energy Policy Research Centre (EPRC) to develop key research infrastructure in the form of economic models.

The main areas of interest of the Energy unit are:

• Energy demand modelling and forecasting
• Electricity markets: interconnection and pricing
• Renewables target and security of supply                 

Energy demand modelling and forecasting

Understanding the key determinants of energy demand is the focus of the energy division, as this has a vital role to play in demand management and, thus, in the efficiency and sustainability of the energy sector.

For residential demand, our results show that the methods employed for space and water heating   are more important drivers of domestic energy usage than electrical appliances ( Leahy and Lyons, Energy Policy, 2010 ). Additionally, other work has been done to assess the main determinants of the energy demand in different sectors ( Di Cosmo and Hyland, ESRI, 2011 )   Further research in this area includes the estimation of the effects of different tariffs and stimuli on household electricity consumption.

For the industrial demand, some work has been done to model the drivers of firms’ environmental expenditure and investment in pollution-abatement technology ( Haller and Murphy, ESRI, 2010 ). Other projects to understand the determinants of fuel consumption for different firm types are also under way.

The transport sector plays a key role in explaining fuel usage and is directly linked to CO₂ emissions and the environment. A series of papers have been published dealing with car ownership and car utilisation ( Nolan, Economic and Social Review, 2010 ; Cummins and Nolan, Transport Policy, 2010 ) as well as a paper on greenhouse gas emissions from aviation ( Mayor and Tol, Transport Policy, 2007 ). Related to this, a model of car ownership and utilization has been developed to estimate the demand for fuels in the private car sector ( Hennessy and Tol, 2010 ).

Finally, the ESRI works with the SEAI and other bodies in preparing official energy projections each autumn (the latest version of the energy forecasts is available here ). Other energy demand forecasts ( carried out using the latest version of ISus ) can be found in the  Energy and Environment Review  .

Electricity markets: interconnection and pricing

Using the ESRI's dispatch model  (IDEM )  to forecast electricity generation and fuel consumption in the electricity sector, we provide some evidence on the amount of interconnection necessary to link the generation systems in Ireland and   Great Britain ( Malaguzzi Valeri, Energy Policy, 2008 ). The results suggest that price convergence is likely to happen with an amount of interconnection larger than the amount currently in place, and that social welfare increases with interconnection, although at a decreasing rate.

This topic is closely related to the determinants of electricity prices in Ireland and Great Britain. Recent work on this topic ( Devitt et.al., ESRI 2011 ) considers the extent to which electricity prices reflect the long run marginal cost, and the appropriateness of retail prices in the different markets.

Research to understand what the best integration options are for the Irish and European electricity markets is also under way.

Renewables target and security of supply

Some research has been undertaken in order to determine which kind of policies should be implemented to achieve the European 20/20/20 targets ( Tol, ESRI, 2011 ). Moreover, work is being commenced to model the effects of increased investment in renewable electricity on investment incentives for other forms of generation ( Devitt et.al., ESRI, 2009 ), and to assess the impact of   REFIT, the Irish scheme to support renewable electricity generation, on the wholesale price of electricity ( Devitt and Malaguzzi Valeri, ESRI, 2011 ) . Related to this, other studies have been carried out to understand the cost of increasing wind generation, both to the system as a whole and to consumers, for 2020, under different levels of carbon dioxide permit prices ( Diffney et. al., Oxford Review of Economic Policy, 2009 ).   Finally, a recent work (Leahy et al. ESRI, 2011) investigates the economic implications of disruptions of one to ninety days to the supply of natural gas in Ireland to understand the costs associated to a natural gas outage.

Energy research has a long tradition at the ESRI, starting with Booth (1966a, 1966b, 1966c, 1967). The first energy model was constructed by Henry and Scott (1977), the first projections of energy use were published by Scott (1980), and the first impact assessment by O'Connor, Crutchfield and Whelan (1981). An overview of energy research at the ESRI is provided by Fitz Gerald et al. (2005).

Programme Coordinator: John FitzGerald.

Others who work in this area include:  Paul K Gorecki, Valeria Di Cosmo , Marie Hyland , Sean Lyons,, and Richard Tol together with Research Affiliate Sue Scott.

We are always interested in hearing from post graduate students who have experience in the energy area and who might be interested in further research.

ESRI research in energy is closely linked to research in competition and regulation, environment and natural resources, macroeconomics, and transport and infrastructure.

• View current research in this area
• Link to recently published research in this area
• Link to recently published working papers in this area
• Link to back catalogue of published research