The future of about 450 jobs at ESB power generation plants in Tarbert, Co Kerry, and Great Island, Co Wexford, is thought to be in doubt with the opening up of the electricity market to competition after February 19th.
Under current conditions, the cost per unit of electricity produced at these oil-fired plants is believed to be up to three times as great as electricity produced at gas-fired plants, a number of which are planned by independent power operators in the next two years. Observers believe this would make it very difficult for oil-fired plants to survive in the long term, as electricity from cheaper generators would be used first on the national grid.
As deregulation of the industry nears, The Irish Times has also learned that the commissioner for electricity regulation, Mr Tom Reeves plans to auction about 400 megawatts of generation capacity on the national grid to private firms in the next three weeks.
It is also believed that the Minister for Public Enterprise, Ms O'Rourke, will seek approval to establish the ESB's grid management functions as an independent entity at a Cabinet meeting on Tuesday, February 8th.
While the trading modalities of the use by independent suppliers of electricity generated by the ESB are currently being worked out, the power capacity is likely to be sold in time for competition to start on February 19th, creating a "virtual market". Some 200 megawatts generated in Northern Ireland will be available through the North-South Interconnector.
The capacity will be sold in 5 MW tranches to suppliers, who will sell it on to industrial users of electricity. This will enable suppliers to establish themselves in the market before the completion of their own generation stations, the first of which are likely to come on stream at the beginning of 2002.
About ten consortiums are planning to build generation stations, although it is thought unlikely that all will be built, as only 28 per cent of the electricity market will be liberalised initially, putting about 800 MW on the market. Total electricity production currently amounts to about 4,500 MW. While groups planning to generate electricity independently of the ESB have voiced concerns that the ESB continues to manage the national grid, it is thought likely that Ms O'Rourke will move to establish the management of the national grid as a separate entity to the ESB.
Industry observers say the ESB's capital-intensive oil-fired plants, which employ about 250 workers at Tarbert and 200 at Great Island, are uneconomic and likely to be hit hardest when competition from cheaper generators becomes a reality.
The ESB is spending some £200 million (€254 million) on a new gas generator at Ringsend in a joint venture with Statoil. Planned for completion by early 2002, this will generate power at an estimated cost of 2.2p per unit. Oil-generated power is believed to cost more than 6p per unit.
