Vol. 451 No. 3
4 Mr. Molloy asked the Minister for Transport, Energy and Communications the present position regarding the proposed peat-fired power station in the midlands; the estimated cost per unit of electricity to be produced there; the estimated cost of electricity being produced in each of the existing peat fired power stations; and if he will make a statement on the matter. [6509/95]
I am fully committed to the continued use of peat for electricity generation on the basis that it can be increasingly provided on a competitive basis. The proposal for a new 120 MW peat fired station to be located in the east midlands is a vital new element in this drive to competitiveness and essential for the future financial strength of Bord na Móna. I indicated at the outset of my taking responsibility for energy that securing EU support for this important project was one of my immediate top priorities.
On Monday this week I met Commissioner Wulf Mathies to impress upon her that the new regional development dimension to this proposal was vital for the east midlands area. The jobs to be provided within Bord na Movna and in the ESB even outweigh the essential national energy security aspect to the proposal. In my meeting with the Commissioner I believe that she recognised the essential job dimension I presented to her and that she shares my broad views on both this aspect and on the enhanced environmental standards of new state of the art technology which will be introduced by this project.
The Commissioner, naturally, had her own outstanding concerns but we both agreed that these would be addressed on Wednesday by way of undertakings from me given through my senior officials who will visit Brussels today. With agreement on these concerns, a final positive decision may well be forthcoming within the next few weeks.
Given the difficulties encountered with the previous Commissioner and the clearly negative attitude underpinning these difficulties I am pleased at such a constructive outcome to my initiative.
EU support for this project will not only bring a vital grant aid support of £21 million but will also be an important vote of confidence in the east midlands region.
With that level of European support a feasibility study carried out on behalf of Bord na Móna estimated that electricity could be sold to the grid from the new station at an all-in cost of around 3.7p per unit at 1993 prices. Without any grant assistance, the consultants estimated that the cost per unit of electricity would be in the region of 4.1p. At the planned price of 3.7p per unit the next generation of peat electricity stations would provide electricity at prices comparable to heavy fuel oil and gas and very significantly less than the costs per unit from existing peat generating stations.
I have been advised by the ESB that in 1994 the average cost of electricity from the existing peat fired power stations was as follows: Ferbane, 8.0p; Shannonbridge, 4.8p; Rhode, 6.3p; Lanesboro, 4.3p; Bellacorrick, 6.4p; and Gweedore, 16.0p. These costs per unit are affected by items such as load factor and load profile and cannot, therefore, be used directly for comparing station performances.
I am grateful to the Minister for the comprehensive information he has finally given the House and I wish him success in the discussions taking place with the EU Commissioner on this issue. Is it true that the experts advising the Commissioner recommended some time ago that this proposed peat powered station should not be grant aided? Is that the reason ministerial meetings with the Commissioner were held and because that did not resolve the matter further meetings are taking place? The initiative for this proposed peat powered station was taken when I was Minister and I have an interest in ensuring that it comes to fruition at a viable economic unit price in terms of the electricity output. The figures quoted by the Minister are encouraging if they can be achieved in practice. Will he indicate the level of opposition that exists among advisers to the Commissioner and the reasons for it?
I am aware of the Deputy's interest in this, the sequence of events and his direct input as Minister. The Government is totally committed to providing this peat fired power station.
With or without EU grants?
Irrespective of the outcome of discussions, the Government is committed to the provision of this peat fired power station in the east midlands. It recognises the almost total reliance of Offaly and north Kildare on peat and on the contribution Bord na Móna and the ESB are making to those local economies.
That is not a change in policy. It was the policy of the previous Government.
It is not a change of policy. I am confirming the Government's position in respect of it. It is totally committed to the provision of this plant. The European Commission had a negative attitude towards this plant on the fundamental grounds that it considers the generation of electricity to be a lucrative area. Each member state should be in a position to fund its supply of electricity, an essential commodity. I have moved the discussion from that area and emphasised to the Commissioner the regional dimension and the strategic importance of this proposed plant to the east midlands and the impact it will have on jobs and on the local economies. I emphasised to the Commissioner that this area is totally dependent on the activities of Bord na Móna and the ESB which are interconnected and that the proposed peat fired station would underpin the Government's commitment to it. I am satisfied that, as a result of the discussions which will take place today and the commitments and clarifications I gave the Commissioner yesterday in respect of the Government's position, grant aid will be forthcoming. I am satisfied also that the project will be approved by the Government and that the ESB, Bord na Móna and any interested consortia can compete for the construction, operation and maintenance of it.
What level of grant does the Minister expect the proposed plant will qualify for?
To reach the 3.7 pence per unit we would need to receive money from the European Union and be in a position to make £21 million available to those who will build the proposed plant.
What percentage of the cost is that?
It is 25 per cent. It is estimated that the project will cost £90 million. A significant contribution of £70 million will be made by whoever builds the plant.
Under which EU scheme would the 25 per cent grant be payable?
Grant aid would be drawn down under the operational programme for Structural Funds. It has been forwarded under those proposals and no other scheme is available in respect of that grant. The Rechar scheme does not cover this utility.
The time for dealing with these questions is quite exhausted. I can deal with Questions Nos. 5 and 6 in ordinary time in accordance with the new procedure of the House.
We are grateful for that.
