Peat Power Pivots From Brown To Green

Bord na Móna has been an employment mainstay across the midlands for nearly a century. With no future in peat extraction, CEO Tom Donnellan tells Nick Mulcahy what comes next

As state enterprises go, Bord na Móna has been a tremendous success. Established as the Irish Turf Board in 1933 as Fianna Fáil started governing the country, in 1946 the venture became Bord na Móna, with the same mandate to develop Ireland’s bogs as an indigenous fuel source alternative to imported coal. Over the decades power stations sprung up across the midlands, powered by turf sods and milled peat from the bogs.

Bord na Móna was a great employer in areas where good jobs were scarce. Defined benefit pensions were the norm and every worker had a union at their back. The company provided self-employment opportunities too. Families were allocated parcels of bog and could earn money on a piece rate depending on the number of turf

Oweninny wind farm in Mayo will expand after a successful bid at the recent Renewable Electricity Support Scheme auction sods they could chop up and dry.

Bord na Móna has denuded many of the country’s bogs but there’s still sufficient peat in the ground for decades to come. Now though, the old game is up. Generating electricity from peat is hopelessly uneconomical, and was only made viable by the Public Service Obligation tax levied on every electricity consumer. In recent years the PSO kick-back to Bord na Móna was equivalent to the entire wage bill for c.2,000 staff.

Ironically, when the PSO was established in 2001 its primary purpose was to subsidise electricity generated by wind farms as Ireland made its first tentative green steps. Carbon-belching Bord na Móna was included in the PSO honeypot on the long outdated rationale of energy supply security.

The absurdity of this situation was recognised by government a few years ago and Bord na Móna no longer has the PSO crutch. Planning authorities have become more greenfingered too, raising sustainability objections to Bord na Móna’s power-related endeavours.

At the end of this year, ESB is closing its two midlands power stations. They are among Bord na Móna’s largest customers and they can’t be replaced. Bord na Móna has its own power station in Edenderry. This burns a mix of peat and biomass to generate electricity, and the plan is for biomass-only from 2023.

So Bord na Móna’s raison d’etre is rapidly disappearing. In one sense the company is Ireland’s most prominent victim of climate change hysteria, though the sensibilities of global

I mostly worked abroad, with Alcatel-Lucent and Packard Bell in Paris and New Jersey, and before that I had roles with Samsung and Apple. During my time with Apple in Ireland in the early 1990s, I realised that the real stuff goes on elsewhere, and that’s why I moved abroad. It was very interesting and a great period.

The global executive life is full-on. You are on a plane most of the time and travelling the world, so when the Bord na Móna opportunity came up it ticked many boxes. The company required major transformation and that’s what I had cut my teeth on in those multinationals. The whole area of climate change excited me, as did giving something back to Ireland, as corny as that sounds. By the way, I have never worked as hard, which is not what I expected going into a semi-state.

Móna would transform and set a new direction. The other option was you have served the state, fold up your tent and go away.

Tom Donnellan is moving Bord na Móna away from peat extraction to renewables

reduced that. In 2018/19 we reduced the headcount of the company by 25% and took out about 40% of our costs structure. We closed our coal business and cancelled plans to build a new smokeless coal plant.

All that was left started to be profitable and generate cash, so we were able to stand on our own two feet. That very important first step was painful, but we got through it and we had great support from our stakeholders. This was a necessary step that had to happen for the survival of Bord na Móna.

The second part of the strategy was to decide what we were going to do now, given that this peat story was probably going to end sooner rather than later. We called the second part ‘Extend the Core’. We had wind farms and they were off on the side, but we had expertise and wind energy has relevance. I saw a great opportunity in that. We have a large land bank of c.200,000 acres, much of it in remote areas, and we have good community relations, which helps in building out a large renewable pipeline.

We developed an accelerated renewable pipeline that involves us building out wind, solar, biogas, biomass and battery renewables. We will be the largest player by far in the country building out renewables. So it came from being on the periphery to front and centre, and we’re going to spend about €1.5 billion over the next ten years on that.

We have a large solar plant in for planning in Kildare, and we have converted our power plant in Edenderry. It’s now running 50% biomass in the plant and we will move that to 100%. We have planning in for an anaerobic digester, and for the battery storage too.

We had acquired a waste business back in the day because we had a large landfill in Drehid. Again, that was on the periphery and when I came in there was talk of why are we in it, should we sell it? I took the view that this could be very significant for us on a number of fronts.

Everything that goes in your blue bin or green bin for recycling is exported. We saw an opportunity in the recycling area and put a number of projects in place. The first one was recycling the 1.5 million tyres discarded by the motor fleet every year. Half of them are exported, and who knew where the rest went. We process c.700,000 tyres in a new Drogheda factory. We break down the tyres to crumb rubber which is used for all-weather pitches, playgrounds, equine mats and other uses.

We’ve also introduced the country’s first plastic recycling facility at Littleton in Thurles, in what used to be a briquette factory. The first stage is recycling the black plastic used on farms into pellets that are reused in new plastic products for packaging. That created 40 jobs and we’re now looking at bottle recycling.

In Tullamore we’re building a facility that will incinerate waste and turn it into electricity. We have a pipeline of such projects as we move up the waste management value chain, and landfill for building materials is also on our agenda. We see ourselves now as a climate change solutions company — that’s our mantra.

When I joined the company, there was a lot of activity going on without much

Bord na Móna is focusing on growing medicinal herbs for use in the pharma industry and cosmetic applications as part of its new strategy

focus. With Accenture’s assistance we went through a process to identify what new projects we should be involved in. New ideas have to be commercially viable, to use our land assets, to create jobs in the midlands and to be doing something that the state would want us to do. We can’t be competing with private enterprise directly.

The third piece of our strategy is ‘Scale the New’, and anything new we embark on has to be adjacent to what we’re doing. One project is medicinal herbs used in pharmaceutical and cosmetic applications but also for herb shops. We are currently on phase two of that trial. We might decide that it’s not for us, but we see that as a huge market.

The financial fundamentals of the company have never been stronger. Our operating profit is starting to grow and the 2019/20 results were impacted by further impairment and restructuring charges. We have a lot of assets in the peat area, such as the largest rail network in the country and harvesting equipment that has to be written-down as we move away from peat.

We have eliminated all our debt, and now it’s about delivering on the strategy. For the current year that started in April, we’re forecasting that we will return to very good profits, despite the Covid-19 impact.