Aughinish Alumina has revived plans to build a power station at its plant in Limerick, but on a smaller scale to the project abandoned last year.The development sees the arrival in the Irish market of E.ON, the major German group, which is taking a 50 per cent stake in the 140 megawatt (MW) plant.
With a market capitalisation of more than €37 billion, E.ON operates in 19 states worldwide. On Monday it completed an €8.1 billion acquisition of the British electricity group PowerGen.
Its arrival in the Irish market follows the departure last year of Bord Gáis and US group ATCO from a separate initiative to build a 250 MW electricity station on Aughinish Island in the Shannon Estuary.
E.ON's Benelux division and Aughinish - part of the Swiss-based Glencore group - will invest €50 million each in the plant, which is scheduled to be completed by 2005.
Asked why the plans had been scaled down, an Aughinish spokesman said: "The uncertainties about electricity market liberalisation in Ireland have persuaded the company and E.ON that this was the optimal size for the project."
The company said 200 jobs would be created during the construction phase of the project. Aughinish employs 450 people.
Some 40 MW of the output from the combined heat and power (CHP) station will be used for aluminium production by Aughinish and the remaining 100 MW will be fed into the national grid.
The company is one of the largest electricity users in the State and it also has a requirement for the steam produced in the CHP process.
Aughinish's spokesman said it had an agreement to connect the plant to the national electricity grid.
An application would be made soon for a generating licence and the two companies were progressing the necessary consents.
The development is a positive one for an industry that has seen a number of potential investors abandon or scale back their plans. In addition, rising demand for electricity means that potential shortages have emerged at peak demand times during winter.
Departees from large-scale projects included Bord Gáis, whose involvement in the original Aughinish plan would have made the State gas company a significant player in electricity business.
The company retains a small-scale interest in the electricity-supply business but is expected to concentrate in the medium term on a number of major gas infrastructure projects.
