Barriers to increased electricity interconnection between neighboring markets

Increased interconnection is a goal of European energy policy in order to increase competition, reduce market reserve requirements and facilitate renewable energy. This study investigated the influence of market barriers on interchange trading between the Great Britain market and the all-Ireland Single Electricity Market (SEM). Historical analysis of cross-border trading demonstrates significant restrictions in interchange flow. The analysis proves that factors such as different market structures, operational rules and market strategies of power suppliers have a significant influence on cross-border trading. Representation of these barriers in an electricity market model, developed in Plexos software, allowed simulation of the interchange flow and the replication of historical patterns. Modelling of the adjacent electricity systems with the removal of market barriers led to a significant increase of import flow from the GB market and a lowering of the electricity spot price in the SEM. This indicated the necessity of cooperation between governments and other stakeholders in order to achieve maximum benefits from interconnection operation.