Report: Energy costs are too high

By Business Reporter

Wednesday, December 16, 2009

DOWNWARD pressure on costs has been called for in an ESRI study on investing in electricity infrastructure and renewable energy.

The level of investment needed in the electricity sector in the near future is huge "when one considers the joint effect of building more wind-farms and the need to extend and upgrade transmission and distribution lines," the report states.

Transmission and distribution has to be upgraded "because many lines are ageing and more lines are needed to accommodate the increase in wind generation and the complementary investment in new interconnection."

The study highlights the need to keep capital costs down. Maintaining regulatory certainty is vital in the all-island market since it will allow banks to assess the risks more easily and, therefore, result in lower financing costs.

"The high level of future investment in transmission and distribution suggests that it is also important to keep maintenance costs low," the report states.

In most developed economies employees working in the utilities sectors, such as water, natural gas and electricity, earn more than manufacturing workers.

Here, the ratio of utility workers’ pay to manufacturing workers’ pay is significantly larger than in other European countries.

If labour costs in Ireland remain high, the cost of updating transmission and distribution networks may be greater than necessary.

This story appeared in the printed version of the Irish Examiner Wednesday, December 16, 2009