Ireland faces power shortage

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Ireland faces power shortage

By John Murray Brown in Dublin Published: February 20 2001 18:11GMT | Last Updated: February 20 2001 18:40GMT

Ireland is facing a looming power shortage as it struggles to bring new generating capacity on stream. Fuelled by the surge in foreign investment and a housing boom that pushed connections to record levels, electricity demand rose by 6.8 per cent last year, making it Europe's fastest growing market.

However, as demand has increased the existing network is coming under severe strain, with industry officials warning that the system is operating "dangerously close to capacity".

Kieran O'Brien, managing director of the national grid, says: "It is fair to say that for an awful lot of this winter we did not have the margins [of reserves] and we probably won't have it next winter either."

The Electricity Supply Board (ESB), the state-owned utility, has already taken the unprecedented step of shipping in four mobile generator sets from the US to see it over the winter. Plans are in place to bring in at least the same number of temporary power units next winter.

The need for new capacity occurs as the authorities grapple with the problem of opening the market to competition in line with European Union directives.

The market is set to be fully liberalised by 2005. From February last year private power companies can supply up to 28 per cent of the market.

The ESB believes shortages can be avoided if new private sector investments come on stream during 2002. The company has a joint venture with Statoil for a 400MW plant in Dublin. Viridian, the former Northern Ireland utility, is building a 340MW station north of the capital and in county Waterford Rolls-Royce's energy arm has the go-ahead for a 100MW station.

But with domestic prices pegged back to restrain inflation, John Fitzgerald, author of a recent report on energy demand, says further new entrants may be discouraged.

Ireland has the third lowest energy prices in the EU - only in Finland and Greece do consumers pay less. According to the ESB, prices have increased by just 3.5 per cent since 1985, against inflation over that period of 45 per cent. The regulator is due to announce a new pricing structure later this year.

Since 1987 annual demand has grown from 10,000 gigawatt hours to 23,000 gigawatt hours last year - more than the growth in the market in the previous 80 years.

The ESB says it made 58,000 new connections to private homes last year, more than in any year since the massive programme of rural electrification in the late 1950s.

As has happened in Amsterdam and other European cities, Dublin's power infrastructure is set to face additional strains with the growth in web hosting facilities. These need large cooling systems, which officials say consume as much electricity as a small town.

John Doherty, director in charge of e-commerce promotion at the government's Industrial Development Agency, says: "The challenge is to manage this through the next two years until new capacity comes on stream."

The ESB acknowledges it is operating in "increasingly tight conditions" with the buffer of reserve capacity at less than 10 per cent of the installed capacity of 4,500MW. In the UK the reserve is closer to 35 per cent, according to industry officials.

In a report last March the ESB calculated it was 200MW short of capacity. Unlike California, where the problem has been the lack of investment since deregulation, Ireland's historic problem is lack of investment in new capacity by the ESB. "No one anticipated the market would grow as it has," the ESB says.

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-- Martin Thompson (mthom1927@aol.com), February 20, 2001


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