Bord Gáis is planning to spend up to €300 million to build its first power plant, to be located on the site of the former State oil plant at Whitegate in Co Cork, writes Una McCaffrey
The company said yesterday that it had signed heads of agreement for a 25-acre site within the Whitegate site, which is now owned by US oil giant ConocoPhilips.
Bord Gáis hopes to develop a 440 megawatt gas-fired power plant that will be fully operational by 2009. With this capacity, the firm said it would "in time" be able to sell into the domestic residential market, as well as building on its existing presence in supplying electricity to businesses.
The firm entered the electricity supply market in 2001 and has since built up a market share of 8 per cent. It supplies power to more than 2,500 companies and is the third-largest supplier of electricity in the Republic.
Until now, Bord Gáis has been limited to buying in power from suppliers such as the ESB and wind developers under short or medium-term contracts. The planned move into generating its own electricity marks a very significant milestone in the market.
Dave Kirwan, head of strategic investments at Bord Gáis, said the firm needed to invest in a plant itself so that it could plan for the long term.
"Accessing long-term contracts in the Irish market is challenging. The current dynamic of the Irish market means that power contracts are not currently made available to all market participants equally," said Mr Kirwan.
Bord Gáis has applied to Eirgrid for a connection to the national grid and has applied for planning permission for the plant at Whitegate.
The development will also require the sign-off of the Minister for Communications, the Marine and Natural Resources, Noel Dempsey.
The proposed investment of up to €300 million will come from Bord Gáis's own resources as a semi-State company. It will need to be justified on a commercial basis. "This proposal is consistent with the stated long-term dual fuel strategy of the company," said Mr Kirwan.
Under the terms of the deal with ConocoPhilips, Bord Gáis will initially lease the 25-acre property but may be able to buy it in the future.
When the plant is up and running, the ConocoPhilips refinery will buy steam from Bord Gáis and will also provide a back-up source of fuel for the new plant.
Bord Gáis was disappointed three years ago when it failed to win a contract to build the State's newest power station. This tender was won by the Tynagh consortium, which put its new gas-powered plant in Co Galway into operation a few weeks ago.
Bord Gáis's electricity supply business produced revenues of €124 million in 2004.
