The small size of the Irish market makes it likely only two companies - ESB and Viridian - are likely to be successful in the long term, according to a report on the Irish energy sector by NCB.
The report says the main challenge facing the sector is developing the infrastructure to meet the mounting demand caused by Ireland's economic growth. The report estimates investment of 3.8 billion euros is needed.
The report also says that ESB and Bord Gais should only be privatised when it is clear a competitive energy market has been established.
The report says competition should be facilitated without allowing the cherry picking of profitable businesses from the state incumbents. Equally once competition is introduced measures must be taken to improve the ESB domestic cost structure so it can compete effectively.
The reports adds: 'The Irish energy market should be viewed in an all-Ireland context in terms of size infrastructure, market dynamics and regulation'.
