Potential outside investors in the electricity sector consider the Irish market to be small in scale, uncertain, difficult to enter and complicated to operate in, an Energy Ireland conference in Dublin is to be told today.

Mr Patrick Haren, chief executive of Viridian Group, is to tell the conference that the right conditions have to be created to allow for competition in electricity generation. This in turn will allow the development of real electricity supply competition throughout the island.

Mr Haren is to tell the conference that having two small energy markets on the island of Ireland makes no sense. "Instinctively we know that an all-Ireland energy market can only be for the good, providing efficiency, economies of scale, and greater choice for customers."

An all-island market, if effectively implemented, would bring competitive prices, better quality service for customers, and deliver an environment where industry could make the returns that encourage investment and long term commitment, the conference is to be told.

"The interests of efficient generators and suppliers wishing to trade in the market are complementary to the interests of customers," he will say. "Generation in the Republic is already running close to capacity and demand is ultimately in danger of out-stripping supply. It is a given that new generation plant will be needed."

The question is when will the market be sufficiently well defined to offer the level of certainty necessary to give outside investors confidence to invest in further new generation, Mr Haren will say.

Viridian was the first independent company to trade electricity in the Republic, the first independent company to supply customers directly across the North-South interconnector, and the first independent power plant investor in the Republic. One-third of the electricity market in Ireland is open to effective competition, comprising mainly the large industrial customers.

A key issue is ensuring that generation is subject to effective competition, Mr Haren will say. "The problem with high electricity costs in the North is overwhelmingly due to the high cost of generation in the long term generation contracts put in place at privatisation - contracts in which the costs are not subject to regulation and not subject to competition.

The cost structure in the North is a major "yet strangely hidden and protected drag on the development of an all island market, and a major burden to customers in the North."