Ireland's electricity generating capacity will grow by 20 per cent next year, the Minister for Public Enterprise said yesterday.

Addressing the Energy Ireland conference in Dublin, Ms O'Rourke said new generating plants in Ringsend and Huntstown, both in Dublin, would add more than 700mw of capacity.

She told the conference that major strides had been made throughout the sector in advance of full competition in the electricity market in 2005, including the setting up of the independent regulatory commission for the sector and an independent company, Eirgrid, to operate the national grid or transmission network.

But Mr John Evans, an economist with the Competition Authority, warned there was a potential problem with an arrangement whereby Eirgrid did not own the transmission or distribution system assets and the ESB is supposed to carry out all maintenance and construction work.

He said the manner in which this problem would evolve would depend on the infrastructure agreement that the ESB and Eirgrid were currently negotiating.

Mr Michael O'Connor, Partner with Matheson Ormsby Prentice, said that planning was proving to be a considerable obstacle to new entrants setting up greenfield developments in Ireland. For those planning to invest in, or acquire, existing plants, there were also a limited number of potential targets, he said.