I thank the Chairman for the invitation to appear before the committee this afternoon to share the ESB's perspectives on the just transition. Specifically, we will cover the ESB's generation from peat in the midlands and our recent decisions, the just transition and the ESB's ongoing commitment to the midlands region.
The ESB has been involved in the generation of electricity from peat for more than 60 years in eight different counties. Early this century, the last of the milled peat stations at Shannonbridge and Lanesborough were decommissioned and replaced by the more modern plants on the sites that exist today. Between them they have the capacity to generate approximately 250 MW of electricity. They are underpinned by a PSO which recognises that the cost of electricity production from peat, then and now, is and was more expensive than competing forms of generation. That PSO, which ensured the commercial viability of the stations, expires in December 2019. In addition, the planning permission for both stations will expire at the end of December 2020.
In the period since these stations were commissioned, climate change has come to the fore of public policy, internationally and nationally. It has been clear for some time that peat could not continue indefinitely as a fuel for electricity generation. Recognising that reality, the ESB developed a strategy to secure a long-term future for the midland stations by progressively converting both stations away from peat to renewable power production using biomass fuel. As part of this process, a planning application to transition the Shannonbridge plant from peat to biomass was submitted to An Bord Pleanála in November 2018. Despite the best efforts of the ESB in supporting our proposal, this application was rejected in July 2019.
Since then, the ESB has undertaken a review of the options for both stations after 2020.
Having considered the key planning, climate and commercial issues associated with peat and biomass, the ESB has concluded, regrettably, that there is no model for these plants that is feasible beyond 2020. As a result, we announced on 8 November 2019 that both stations will cease generation of electricity at the end of December 2020. This is a matter of significant regret for the ESB as our generation business has had a long association with the midlands and was an important enabler to social and economic development over many years.
We have now started the process of engaging with the 80 people employed in these stations in order to prepare for an orderly closure. The ESB has closed stations before and we have well-established processes and procedures to address the difficult matters that arise for our staff. Our first priority will be to engage with our colleagues at the stations. I confirm that we will be providing all our colleagues with redeployment and severance options. I expect, based on early indications, that a significant number of our staff - more than half - will seek redeployment to other roles within the ESB Group. I also expect they will be successful as we will offer these staff roles elsewhere within the group. I expect the remainder will want severance but that matter has yet to be discussed with the staff. We have yet to engage with them formally but those are the initial indictions. To an extent, this is an in-company version of a just transition.
With regard to just transition, on an international and national level, the just transition concept has been developing over the past 24 months at European Union level and is still being discussed in the complex negotiations on the multi-annual financial framework, MFF, between the European Commission, the European Parliament and member states. Initial indications are that the EU just transition budget will be in the order of €5 billion. The intention, as we understand it, includes providing assistance to regions that are transitioning from coal-based industries or related, high carbon-emitting industries. Recently, the Minister for Communications, Climate Action and Environment, Deputy Bruton, confirmed that the midlands will be recognised as a region in the process. This is to be welcomed. For our part, and in recognition of our long-standing engagement with the region, the ESB announced a €5 million contribution to a just transition fund for the midlands, which will complement the Government’s contribution of €6 million announced earlier in 2019.
With regard to the ESB’s ongoing commitment to the midlands region, the company recognises that the recent announcement will impact on the midlands region. This, however, does not mark an end to the ESB’s long relationship with the region. While I speak today as director of generation, I will also set out the broader ESB footprint in the midlands, which include ESB Networks depots in Athlone, Ballinasloe, Longford, Mullingar, Portlaoise, Roscommon and Tullamore. More than 400 colleagues work from these locations. Our national training centre in Portlaoise has 43 staff providing training to 280 apprentices from all over Ireland. Over the past three years, ESB Networks has invested some €175 million in operating and developing the electricity network in the midlands. This supports the economic development of the region. An ESB national payroll hub is based in Tullamore and ESB fisheries, based in Belmont and Lanesboro, support leisure and tourism facilities on the River Shannon. The ESB owns and operates several renewable energy wind farms across the midlands, each of which contributes significant revenues in local authority rates and provides appropriate community gain funds. This week, we are announcing the latest annual disbursal of wind farm community grants to communities in counties Leitrim, Roscommon and Sligo. We are ambitious for the midlands region and its economy in the future. The ESB is actively exploring options in investing in renewable energy projects in the region. SIRO, our joint venture with Vodafone, has brought fibre broadband to 50,000 homes and businesses in many towns across the midlands region.
Despite our best efforts, the ESB was unable to secure a viable future for our two stations at Shannonbridge and Lanesboro beyond 2020. This marks the end of an era of ESB peat generation in the midlands. We very much appreciate the commitment of our colleagues and the support of the broader community over many decades during which the ESB, in strong collaboration with Bord na Móna, played a key role in the development of the economy of the midlands. We are committed to an orderly closure of the plants and we will commence formal engagement with our colleagues on the details of these closures in the coming period.
We also welcome the appointment by the Government of the just transition commissioner, Kieran Mulvey. Mr. Mulvey has a vital role in ensuring a co-ordinated and effective approach to just transition for communities and workers affected. We look forward to working with him. To help with this work, we are contributing €5 million to the just transition fund for the midlands in addition to the €6 million provided by the Government.
The ESB is proud of its association with the midlands. We will continue to invest in the region as we move, in the coming years, to ever more sustainable means of electricity production and delivery for all our customers. Go raibh maith agaibh go léir.