Investment bank to put €500m into electricity sector

A €500 MILLION investment package in the Irish electricity sector by the European Investment Bank will see construction work on the Ireland-Wales interconnector begin next year, it was announced yesterday.

“Soft” loans from the European Investment Bank will see up to €300 million invested in the interconnector, while a further allocation of up to €200 million has been approved by the investment bank for development of the ESB’s renewable energy businesses, principally wind farms.

The loans are in addition to a grant of more than €110 million for the interconnector, under a “stimulus package” approved by the European Commission in July.

The total cost of the interconnector is in the order of €600 million and the 256km undersea cable will provide capacity of about 10 per cent of the State’s winter peak demand.

It will allow the State to buy electricity from Britain during times of strong demand and crucially for the development of wind energy, will also allow the State to sell into the British grid at times of excess power.

This is the first time a loan sanctioned under the EU’s economic recovery plan has been used for an energy project and it is the first EIB loan for renewable energy in Ireland.

At the announcement of the funding in Dublin Castle yesterday, EIB vice president Plutarchos Sakellaris said the timing of the Lisbon referendum had nothing to do with the scheme, which he said the EIB had been working on since early 2008.

Mr Sakellaris said the European Investment Bank was also prepared to invest in Dublin airport.

Investment in Ireland generally was an investment by the other 26 EU member states and there was no need “to be suspicious of the loans”.

The loan of up to €200 million to the ESB is to be used to develop its renewable energy business by installing 248MW of wind power capacity by 2012 in various locations.

The total cost of the investment programme is estimated at €475 million.

The loans bring total EIB support for Ireland in 2009 to €850 million, almost double the 2008 total of €450 million.

EirGrid which is developing the interconnector said it expected the project would result in about 100 jobs in Ireland and about the same number in Wales during the construction phase.

The project is due for completion in 2012.

Chief executive of Eirgrid Dermot Byrne said the State was on target to achieve 15 per cent of its electricity from renewable resources by next year. The EIB money would assist in achieving the target of increasing that to 40 per cent by 2020.

Minister for Energy Eamon Ryan said it would be easy to get caught up in figures and targets, but the point of the exercise was to offer offices and homes clean, cheap electricity in order to sustain employment.

Secondly it would allow the wind energy sector to be developed, selling on what was not needed through the interconnector, and thirdly it would assist in reducing carbon emissions and help move to clean power.

Mr Ryan told The Irish Timeshe had no doubt the interconnector and wind energy would be the most important pieces of infrastructure to be developed in the coming years, underpinning employment, energy security and reduction of carbon emissions.

ESB chief executive Pádraig McManus said the ESB ambition was to become carbon-neutral by 2035. “We are expanding our wind portfolio to 600 MW by 2012. By 2020, one-third of ESB’s generation will be wind-based. Today’s announcement is part of that strategy,” he said.

Ireland currently secures 95 per cent of its energy needs through imported fossil fuels.