The energy green paper to be published tomorrow says the dominance of the ESB in the energy sector needs to be tackled urgently with the company potentially losing between three and four of its power stations.

The paper, to be published by the Minister for Communications, Noel Dempsey, builds on an earlier report - yet to be published - by consultants Deloitte on reform of the electricity sector.

While this report talks about "perceived and actual dominance" by the ESB in the market, the green paper addresses the issue of the ESB as a price-setting entity directly. It says the ESB's control of what are known as mid-merit plants has the potential to seriously distort the market.

These are plants that set the wholesale price of electricity and ESB controls several of them in various parts of the Republic. The Minister is expected to say that the ownership of these plants will need to be looked at seriously.

The Department of Communications is less concerned about what are known as baseload plants. These are plants that run virtually all the time regardless of fluctuations in demand on the national grid.

The green paper is expected to say that up to 1,500 megawatts of power, comprising several stations, are likely to be taken out of commission between now and 2012. This will give an opportunity to shake up the market, the paper will state.

The ESB owns these stations and the crucial decision the Government now faces is whether to allow private sector companies to build new stations on these sites.

It is understood Mr Dempsey will address the issue at the publication of the paper at Government buildings.

While Mr Dempsey will thank Deloitte for its report on reforming the electricity sector, he will not necessarily back its recommendation that ESB be broken into different components.

Deloitte supports a model where ESB networks, supply and distribution are broken into separate units.

While the green paper acknowledges the dominance of the ESB, it outlines its opposition to any attempt to "atomise" the company.

The green paper also speaks favourably about renewable energy and it wants 20 per cent of total output ultimately to come from this source. The contribution of biomass, which involves the burning of wood or vegetation as fuel, is also expected to be recognised in the report.