Taxpayer faces having to pick up €800m tab to keep the power on this winter
Minister conf irms deal to buy 24 back-up mobile generators
‘They are being bought at panic premium prices’
‘Now we are rewarding poor performance’
TAXPAYERS could be left with a massive €800m-plus bill to ensure there is enough emergency power to keep the lights on as the threat of winter blackouts loom.
The news comes days after Environment Minister Eamon Ryan confirmed a contract will be signed in the next few weeks to buy at least 24 mobile generators.
These turbines will be used to provide a back-up supply of electricity. Rental fees will also be paid to the owners of sites where they will be located.
EirGrid, the State agency responsible for ensuring the country has sufficient power supplies, did not respond to specific queries from the Irish Mail on Sunday about the purchase price of these turbines, or the likely rental charges to be paid to the power firms that own the land where the new generators will be located.
A spokesman for Mr Ryan’s Department said they could not provide exact costings as the contracts have not been finalised.
Instead, officials at the Department of the Environment, Climate and Communications would only say that €350m had been allocated to buy the equipment. And they refused to provide any detail as to whether this included the normal commissioning and installation costs that apply when buying this type of equipment.
However, publicly available figures about a deal brokered by the Swiss government last month suggest the Irish taxpayer could be left with a massive €800m plus price tag.
Switzerland paid 450 million Swiss Francs (€458m) to rent eight mobile generators capable of producing 250 megawatts of electricity for five years.
If the same rates apply here, then the Irish State would be left with a €823.6m bill for the 450mw of back-up energy needed to prevent the threat of blackouts.
But this does not include the rental charges of the sites where the mobile generators will be located, the operational costs and site development costs.
The 24 new turbines will be located at the Tarbert power plant in north Kerry, which is owned by Scottishbased energy firm SSE Thermal, and the ESB’s power plant in Shannonbridge, Co. Offaly.
Both firms declined to answer any questions about possible land rental and other charges. Even though the contract for the turbines to provide a back-up supply of electricity will be signed by EirGrid in the next few weeks, these emergency power generators will not be in place in time for this winter.
As a result, this leaves the country emissions standards: The North Wall Power plant in Dublin vulnerable to power outages during the coldest months of the year. An industry source told the MoS: ‘These generators are being bought at panic premium prices and every country in the world is looking for these units. Most countries have very big cheque books and, if the recent deal in Switzerland is anything to go by, then Ireland could be paying more than €823m for the back-up energy.
‘Then there are the rental costs on top of that for the land where these mobile generators will be located. EirGrid is a key actor in the failure of the 2019 auction and, to add insult to injury, now we are rewarding poor performance.’
Ireland secures enough electricity by organising energy auctions to buy electricity. An All-Ireland group called the Single Electricity Market Committee, consisting of three representatives from the North, two from the Dublin-based Commission for Regulating Utilities and two independent board members, determines how consumers’ interests are best protected.
It does this by ensuring several companies are able to compete against each other to submit bids and win contracts. However, these auctions are run, managed and awarded by EirGird.
The background to the current energy crisis dates back to 2018 when EirGrid held auctions so rival firms could bid to provide energy starting from October 2022. The
ESB put in a bid price of €46,150 per MW, even though it was told those involved in organising the auctions that €138,450 per MW price ‘would be too tight’ for a new entrant to deliver.
Nevertheless, the ESB’s €46,150 bid rate was accepted, and they emerged in 2019 with a ten-year contract worth €188m to provide 408 MW a year.
In order to be in a position to meet this contract, the ESB proposed building three new plants and installing new equipment at two separate locations at its existing North Wall plant.
Meanwhile, one of the conditions of the contract awarded to the ESB was that the company should have planning permission for its new power plants secured by November 2020.
However, the ESB failed to meet this deadline and looked for a six-month extension. This was granted, but it failed to meet the second deadline and a request for an extension was denied.
Unfortunately, the company due to supply the new equipment for the ESB’s two new remodelled plants at the North Wall site in Dublin could not guarantee their machinery would meet the new EU emissions standards stipulated in the contract. The ESB was forced to pay a €4m fine for reneging on a contract to provide power.