ESB subsidiaries win €58m 'green' contracts

Subsidiaries of the ESB and their partners have won €58 million worth of green energy contracts to supply electricity to the State company, beating off competition from independent companies Eirtricity and Eco Wind.

The Minister for Communications, Marine and Natural Resources, Mr Ahern, yesterday awarded 48 green energy contracts for the supply of electricity to the ESB.

Four companies connected with the semi-state group secured the lion's share. Eirtricity and Treasury Holdings' Eco Wind were successful on just two small projects, a result which surprised both companies.

The Kish Consortium, comprising ESB International and its partner Saorgus Energy Ltd, was awarded two offshore wind contracts for the supply of 25 megawatts (mw) each. Industry sources estimated last night that with a unit price of five cents per kilowatt (kw) hour, sales would reach €5.5 million each a year.

Kerry-based Saorgus Energy won onshore wind contracts for the sale of 157.55mw, with an estimated value of €45.5 million. Hibernian Wind Power Ltd, a company controlled by ESB Power Generation Ltd and ESB International, won two similar deals for a total of 60mw, which would earn €13 million in sales.

The Department imposed price caps of 5.21-5.74 cents per kw hour on the contracts, depending on the method of generating electricity. Industry sources said last night the deals would be valued at around five cents per kw hour.

On this basis, the total value of the contracts awarded to the four companies would be €58.6 million, out of a potential total of €60.6 million worth of large-scale wind-generation contracts.

Saorgus Energy's shareholders are businessmen Mr Michael Barry from Tralee, Mr Aidan Forde, from Killarney, and Mr John Bourke, of Killiney, in Dublin, who is also a director of Heiton Holdings.

An Eirtricity spokesman last night said the company was disappointed and was reviewing its options. Eirtricity is developing Europe's largest wind-generation facility at the Arklow Bank in the Irish Sea. It was widely regarded as a front-runner for at least one of the off-shore projects.

Mr David Tyndall, managing director of Eco Wind, a subsidiary of property developer Treasury Holdings, said he was surprised by the awards, but played down the result. He argued that the current price-based structure of bidding for contracts did not work.

"What's happening is that people are under-bidding each other and then finding that they cannot build the wind farms," he said. Eco Wind was awarded one contract for 9.35mw.

Fine Gael spokesman on communications, marine and natural resources, Mr Simon Coveney, criticised the Minister for awarding 80 per cent of the green energy projects to ESB-connected businesses. "Now as well as having a monopoly in fossil fuel, it also has one in alternative energy," he said. He added that the semi-state's resources gave it the industrial clout to undercut independent bidders.

However, a Department spokesman last night said the ESB had nothing to do with the process. "The Department assessed these solely on price and the process was independently audited," he said. "The process was designed to give the consumer the best value for money."

The 48 contracts awarded included large- and small-scale wind-generation projects, hydro power and biomass.

In a statement, the minister said the 578mw of green power would provide enough electricity to power 500,000 homes, and would cut dependence on imported fossil fuels by four million barrels of oil a year.