Senior executives behind the Tynagh Energy power station in Galway are backing an application for a 400 megawatt plant in Co Cork which is likely to cost €250 million.

A planning application has been lodged with Cork County Council in recent days for a plant at Little Island. An environmental impact statement has been been completed by the company behind the application, Naas-based Mountlawn Ltd.

The first step to developing a new power plant is to get planning permission. Applicants then apply for a licence from the Commission for Energy Regulation (CER). A grid connection is also required from ESB National Grid. The CER refused to comment yesterday but said it welcomed any new generation capacity.

Tynagh Energy was one of two companies which won a CER competition a few years ago to build two new power stations. The other winner was Aughinish Alumina in Co Limerick. Both companies have a deal to sell their output to the ESB for an agreed price.

According to documents lodged with the Companies Office, among the directors of Mountlawn Limited is Brian Keogh, who was centrally involved in the development of the Tynagh plant.

The new plant will need serious financial backers. When the Tynagh plant was developed, the South African bank, Investec, invested significant sums in the project. Another major player was Gama Construction. According to sources, Gama is unlikely to participate this time. .

Martin Blake, a well known figure in the beef industry took part in the original Tynagh consortium but it is not clear whether he will participate this time around.

ESB National Grid recently indicated that a power station was needed in the Munster area. It is understood there is some congestion in the system around Dublin and ESB National Grid is anxious to spread development more evenly around the State.

The Tynagh plant in Galway is due to open in the next few months. Viridian, the second largest electricity operator in Ireland, is planning a new station of its own at Huntstown, north Co Dublin. Viridian hopes to have the plant operational within three years as demand for electricity rises again in the Republic.

The company has linked up with Mitsubishi Corporation for the project. Mitsubishi will build the gas-fired station. Once commissioned, the station's output will be sold through Energia, Viridian's market supply business.