Search icon

MACSI and ESRI Research Shows that Electricity Users Not Investors are Exposed to Price Fluctuations


This extract first appeared in the Irish Times on 20th April 2017 in an article by Barry O'Halloran

A study by Mel Devine and Niall Farrell of the Economic and Social Research Institute and William T Lee of the universities of Portsmouth and Limerick, says the system means that electricity users, rather than those investing in renewable energy, are the ones exposed to price fluctuations.

The system means that renewable energy producers are compensated when the wholesale price of electricity falls below the tariff guaranteed to them under the Refit scheme.

Homes and businesses pay for this through the public service charge, which increases as the wholesale price falls, while those who invest in renewable power face no risk from movements in the wholesale price.

The ESRI paper argues that policymakers should look at spreading the burden of risk more evenly between electricity customers on the one hand and renewable energy producers on the other.

While the paper does not propose any alternative to Refit, it states that the issues it highlights will become more relevant as the number of renewable generators continues to increase.

Devine, Farrell and Lee also point out that investors tend to have more influence than consumers when it comes to designing schemes such as Refit.