Assessing the effects of increasing offshore wind generation on marginal cost in the Irish electricity market

The marginal unit of electricity generation in the Irish power system is typically gas-powered, meaning gas price fluctuations significantly impact electricity pricing. However, wind generation has no associated marginal cost, which suggests that the widespread adoption of wind power could lower the overall cost of producing electricity. This change in marginal cost will significantly influence existing generators and needs to be better understood. Therefore, using a backcast-validated PLEXOS model representing the Single Electricity Market on the Island of Ireland, multiple scenarios were created representing potential levels of offshore wind integration in Ireland. The scenarios modelled showed that by increasing offshore wind capacity from a baseline of 3.2 GW to a maximum of 4.9 GW by 2029, the marginal cost would fall by approximately 4.10 <euro>/MWh, at the same time reducing CO2 intensity from electricity generation by 58 gCO2/kWh. This correlation between renewable energy capacity and marginal cost reductions and CO2 reductions will likely be replicated in other regions that use the same pricing and electricity dispatch methodology.