Strong interest in electricity interconnectors

Several large energy and electrical companies have expressed an interest in building or owning two new electricity interconnectors between Ireland and Britain at a combined cost of up to €500 million. Emmet Oliver reports.

The two interconnectors, capable of transferring about 500 megwatts of power each between the two economies, could help solve the Republic's electricity shortages.

They would also allow energy companies to import cheaper British power into the Irish market and sell it at a discount.

The two interconnectors would supplement an existing electricity interconnector between Scotland and Ireland known as the Moyle interconnector.

The giant Swiss-Swedish electrical equipment group ABB (Asea Brown Boveri) has discussed the project with the Commission for Energy Regulation (CER), The Irish Times has learned.

The British grid company Tranco UK has also been in touch with CER staff about the project, it is understood. Contacts are described as "very much exploratory".

The US leasing company Babcock & Brown has also been in contact with the CER, as have Davy Stockbrokers and the Canadian energy group Hydro-Quebec, which has experience in building interconnectors.

Another company coming forward was DMM International Inc, a US firm specialising in interconnectors. It is understood none of the companies are interested in taking on a strictly "merchanting" project, where the companies would put up all the finance themselves.

However, the companies are believed to favour a hybrid option where the State guarantees a certain level of return from the project. This might be done by imposing a public service levy on electricity customers generally.

The interconnector idea was first sponsored by the last Minister for Communications, Mr Dermot Ahern.

He asked the CER to invite expressions of interest in the "merchanting" option.

After this failed to elicit firm offers, the Department of Communications asked the CER to investigate some kind of hybrid or regulated model.

The CER is expected to shortly appoint consultants to look into this option.

While major international companies may wish to get involved, there is also strong Irish interest in the idea.

According to CER documents, wind energy company Airtricity has also been in contact about the idea, as has the emerging gas group Vayu. Another company expressing an interest, possibly as a partner in a future consortium, was Shanahan Engineering.

Airtricity is included in a consortium along with Treasury Holdings, Viridian, Goodbody Stockbrokers and the financial company SWS.

It is understood ESB National Grid held informal talks with the CER about the project. The company, which acts as the transmission system operator in the Republic, would be willing to get involved in the project, but is prepared to co-operate with anyone who wants to own or operate the interconnectors.

The two interconnectors would have to be built far away from each other, otherwise the electricity system could become congested.

Consequently, it is likely one interconnector would come ashore somewhere in Co Louth, with the other arriving into a location somewhere in Co Wexford.