Bord Gáis to pay €700m to develop wind farms

STATE ENERGY company An Bord Gáis intends spending €700 million on expanding the SWS wind farm business it has bought for €500 million.

An Bord Gáis said yesterday that it had completed the purchase of SWS, from its owners, a group of investors backed by venture capital firm Ion Equity.

The deal values SWS at €500 million and includes the company’s debts. In 2007, it embarked on a plan to raise €500 million to develop new wind farms, about €100 million of which was equity and the rest was intended to be debt.

SWS is the second biggest wind farm operator in the Republic. Its facilities, based mainly in west Cork and Kerry, have the capacity to generate up to 200 mega watts (MW) of electricity, enough power to supply about 70,000 homes, according to industry estimates.

The company has another 260 MW in its development pipeline. Bord Gáis chief executive John Mullins told The Irish Timesyesterday that the State company intended building this out over the next five years.

An Bord Gáis said in its statement yesterday that it would spend €700 million on this. The development cost and the purchase price will bring its total investment in SWS to €1.2 billion.

The company is committed to spending €2.5 billion over a five-year period on an expansion plan that involves diversifying its original natural gas business into electricity generation and supply.

The SWS purchase and the associated development costs mean that An Bord Gáis’s entire €2.5 billion development spend is now accounted for. It is building a 450 MW gas-powered electricity generating plant at Whitegate in Cork Harbour and it intends to instal a number of smaller gas-fired generators around the State.

The smaller generators will be used at peak times and to back up its wind-powered generators.

Mr Mullins said yesterday that Whitegate, SWS and the peaking plants would give An Bord Gáis about 25 per cent of the Republic’s electricity market, or about 1,000 MW. It is also spending €350 million on its natural gas networks.

The company is responsible for the transmission and distribution of the fuel around the country and is its sole supplier in the domestic market.

The company has €800 million cash on its balance sheet, which Mr Mullins said was enough to fund its ongoing expansion.

In June, the company borrowed €550 million from US institutions through a bond sale. He said that the group may go back to the bond markets in 2011, when it is due to repay existing debt.

Commenting on yesterday’s deal, SWS and Ion Equity partner Ulric Kenny said that it was an excellent fit for both partners.

“The drive and expertise of the SWS team is second to none and in partnership with the resources and ambition of Bord Gáis, the business is very well placed to deliver much needed and efficient renewable energy for generations to come,” he said.