Vol. 435 No. 3
10 Mr. Durkan asked the Minister for Transport, Energy and Communications his views on whether there is a conflict between the reference in the National Development Plan 1994-1999 to the provision of a peat burning generating station in the midlands and the retention of Allenwood generating station; and if he will make a statement on the matter.
21 Mr. Dukes asked the Minister for Transport, Energy and Communications if the Government has now decided on the construction of a new peat-fired electricity generation station; if so, where it will be located; the amount it will cost; the number of people it will employ; and the body that will operate it.
25 Mr. Noonan (Limerick East) asked the Minister for Transport, Energy and Communications if he will publish the consultant's report into the provision of a high technology peat-fired generation station; and if he will make a statement on the matter.
I propose to take Questions Nos. 10, 21 and 25 together.
I have recently received a proposal from Bord na Móna for the provision of a new 120 megawatt peat-fired electricity generation station to be located in the east midlands region. The proposal is at present being examined by my Department and no decision has yet been taken on any aspect of it. I do not propose, for reasons of commercial confidentiality, to publish the feasibility study into the proposal.
Initial estimates indicate a capital cost in excess of £80 million with associated employment of around 84 permanent staff in the station including non core staff and almost 500 jobs in peat supply and with considerable additional jobs created while the station is under construction.
The future of operations at Allenwood power station is not connected with the provision of a new station. Any power station has a finite life and Allenwood has now been in operation for 41 years — an extension of 16 years beyond its original design life of 25 years. As Deputies will be aware, the ESB has recommended the permanent closure of the station and I am considering this proposal taking into account all of the issues involved.
(Limerick East): Will the Minister confirm that he has the consultants report on the new peat-fired station, that it will cost £80 million, that his Department is examining it but no decision has been taken? Is that correct?
That is correct.
(Limerick East): How has the construction of such a station been advanced to Brussels for funding, while it appears in the National Development Plan as a definite commitment?
The reason it is in the National Development Plan is that we will require possible EC funding under the plan should we go ahead with the development. I do not wish to pre-empt the Government decision on the matter but I am satisfied that my persuasive powers and the commerciality of the project will be such that the Government will consider shortly whether it will get the go-ahead.
(Limerick East): I am sure the Minister will agree that this is extraordinarily interesting. I understand that the Minister has a report from the consultants, which his Department is considering, and no decision has been taken, yet it appears in the National Development Plan as a definite commitment to spend £80 million in the midlands. Now he is saying he will persuade his colleagues in Cabinet. What is the position? Is the Minister suggesting that a political decision will pre-empt a commercial decision, or that regardless of the commerciality of the project he will convince his colleagues in Cabinet? Is he saying that a great deal of what is contained in the National Development Plan is simply aspirational and as the years go by it may or may not happen?
Secula seculorum.
It is Government policy that peat is an important part of our indigenous energy resource.
(Limerick East): Do not evade the question with a lot of old guff.
We know the Deputy is on a hot tin roof.
Let us hear the Minister's reply.
It is also the case that there is a need for regeneration if peat is to have a future. We have a very commercial prospect of arranging for that. In the development plan EC funding will be required to ensure that the station goes ahead and I am arranging for that eventuality. On the basis of the existing Government policy, i.e., that peat has a future and the need for regeneration for peat burning fire stations, further power stations have to become a reality.
It was I who initiated the studies on the proposed peat power station. Is the project not dependent on the outcome of the feasibility study? The Programme for Government refers to the feasibility study, as does the recently published National Development Plan. I do not know if it is as firm a commitment as suggested by Deputy Noonan or as stated by the Minister. Will the Minister confirm that the study has shown that it is feasible and, if so, will the Minister inform the House on the projected cost per unit of electricity produced by the new power station?
I wish to retain the commercial confidentiality of the feasibility study until such time as decisions are taken and it becomes a reality. The feasibility study is to hand and it shows that this is a robust project. I have been to Finland where peat technology is well in advance of our own and I am satisfied, having discussed the project with IVO, the group who carried out the consultancy study, that we have a very robust project subject to decisions being taken. It would be wrong for any Deputy to suggest that the station will not proceed on a commercial basis. As a result of rationalisation in Bord na Móna in recent years we can provide milled peat at a very competitive price.
(Limerick East): The Minister is refusing to publish the report on the grounds of commercial confidentiality. That would be a prudent decision if there was a competitor, but what competitor is prepared to build a hi-tech peat burning station here? Why will the Minister not publish the report and allow us to assess the commerciality of the project?
The Deputy is mistaken in believing that nobody would be interested in investing in the power station. That is a wrong assumption. Based on the examination which has taken place so far this is a commercially viable project.
Is the Minister stifling competition?
To suggest that there will not be any interest in the building of this project because it may not be commercially viable is a wrong premise and shows a mistaken understanding on the Deputy's behalf of the new economics of peat as a result of the improved performance of that company.
(Limerick East): Supposing we take the Minister's argument at face value, what would a competitor do with the generated electricity when access to the national grid is so limited and no arrangements are in place for the ESB to put a structure of prices in place to buy that quantity of electricity?
It is not correct to say there is nothing in place that would enable the ESB to take up any electricity generated from this station. Account must be taken of the long term supply contracts and a range of other areas, but to suggest that nobody would buy the electricity simply because we have only one energy utility company is not correct.
(Limerick East): There is nobody to sell it to when the ESB has the monopoly.
It can be sold to the ESB if it is an economic proposition. The feasibility study shows that it is a robust project and compares favourably with fuels from any other power station. I would ask the Deputy to take account of the up-to-date economics.
I want to deal with questions from other Deputies.
How can the Minister make a proposal to Brussels and include a programme such as that in the National Plan without completing the plans? Does he expect his proposals to be taken seriously? Is it not possible that this will turn out like the Kilrush marina, where one plan was submitted to Brussels to obtain sanction for £4 million and following receipt of another plan a marine costing £8 million was built? How could a proposal such as this be taken seriously? Does the Minister expect to receive funding for a proposal which has not yet been adopted by the Government?
The most unlikely comparison one could make is between a peat fired power station and a marina.
The botching by the Government is the same. It should learn from its mistakes.
I want to make it clear to the Deputy, despite what appears to be a very questionable commitment by the Fine Gael Party to the future of peat, that the feasibility study——
We did not close Allenwood.
——shows that this project will be a robust one based on commercial grounds and it will be available for funding under the National Development Plan.
Is it now the view in the Minister's Department that there should not be competition in respect of electricity generation? The suppression within his Department of the commercial viability study which has been carried out is stifling competition. Will the Minister agree that it is desirable, in terms of major investment such as this which will be a significant contributor to the national electricity grid, that there should be open competition?
I am not against competition. I refer the Deputy to the annual reports of the ESB which confirm that it is prepared for competition. As a result of the feasibility study, decisions have to be taken on the precise issues raised by the Deputy and they will be dealt with. Once those decisions are taken, I will be prepared to discuss them in this House definitively rather than speculatively.
Is it the Minister's intention to publish the results of the feasibility study or the feasibility study in toto? If it is proposed, on the basis of the feasibility study, to proceed with the construction of the peat burning power station, is it proposed to advertise the project and invite tenders for its construction in the form of a joint venture between Bord na Móna and another interested company or is it proposed that the ESB will be involved in constructing the power station either on its own or in a joint venture with a third party? If the Minister would give more information, Fine Gael Deputies might not be asking ill-informed questions.
As my predecessor, Deputy Molloy is aware——
It is not fair to the Fine Gael Party.
Deputy Molloy propped up the Government for long enough.
As I stated, the fact that Fine Gael Deputies are not up to date on the economics of peat is not my fault.
We did not close Allenwood or Screen.
The policy options to which the Deputy referred are receiving our consideration and I assure him that the construction of the station will be carried out at the best possible commercial price available so that the energy price will be as competitive as possible to secure its long term viability.
A Leas-Cheann Comhairle——
I am moving on to Question No. 12. We have exhausted a lot of time on this question.
Will a feasibility study be published and will there be an advertisement inviting people to submit proposals?
It will not be published until certain decisions are taken. Should the Government decide to advertise for tenders, people must be informed of the details of the feasibility study so they can make an informative tender.
