OVER THE past five years, Bord Gáis Energy has transformed itself from the traditional gas utility company many will remember it as into a complete energy business with more than one million domestic and business customers for gas and electricity.

“We have made very significant progress since 2006 when we had zero customers and zero generating capacity,” says George Martin, head of asset operations with Bord Gáis Energy (BGE), speaking about the success of its electricity supply business.

“In addition to building and operating one of the safest and most modern gas networks in the world, we now have 234MW of onshore wind power and a 445MW combined cycle gas turbine (CCGT) power plant at Whitegate in Cork. With 680MW of operational plant, we have taken a giant step towards becoming a player of significance in the broad energy market.”

According to Martin, this transformation has been achieved through the implementation of a three-pronged strategy at the company. “Firstly, we invested in a very efficient, state-of-the-art plant,” he explains. “The Whitegate plant is 57.5 per cent efficient – that is world class. The second prong involves us looking at energy consumption and helping reduce it, while the third is investment in new technologies and research that will help reduce Ireland’s dependency on fossil fuels.”

Within the generating area, the company is developing a portfolio of assets that will help meet current and future customer energy requirements, especially renewable.

“We are focused on developing and supporting renewable energy and emerging energy technologies,” says Martin. “Long-term investment in the development of Irish wind generating capacity is a cornerstone of the Bord Gáis Energy investment strategy and we are committed to ensuring Ireland maximises the benefit of the wind, one of our most precious indigenous resources.”

Over the past five years, the company has invested more than €2 billion in conventional and renewable power generation assets as well as the development of its traditional gas infrastructure. Investment in the renewable sector will continue through a major programme of wind farm construction – €50 million in the next two years which will more than double current wind capacity.

“We are doing our bit to help achieve the Government target of having 40 per cent of electricity generated from renewable sources by 2020,” says Martin. “This seemed a very challenging target at the time, but we are plugging away and making good progress towards it.”

The strategy for the development of its wind portfolio has been to combine organic growth with acquisitions.

“What we tried to do when we looked at our wind strategy was to develop a portfolio through the development of our own assets organically, by acquiring sites with planning permission and grid connections and developing them, and through the acquisition of existing assets.

“Following our acquisition of SWS Natural Resources in 2009, our renewable energy capacity is now 234MW, with a further 500MW of wind energy in the pipeline for the next five years. We now operate over 15 per cent of Ireland’s total installed wind farm capacity.”

The BGE wind portfolio now comprises 132 wind turbines in 13 separate wind farms in eight counties – Kerry, Cork, Limerick, Clare, Tipperary, Kilkenny, Donegal and Tyrone. A further three new wind farms are planned to come on line in 2012. Within the next five years, BGE will have 734MW of installed wind capacity alongside the 445MW Whitegate plant. “Wind will form the majority of our generating assets by that stage”, Martin notes.

This rapid increase in wind capacity, both by Bord Gáis and other operators, brings with it different challenges for the network. Wind is by no means a constant resource and we do get a surprising number of still days in Ireland. This means electricity grid operators cannot rely on wind and have to have back-up capacity in place just in case of a sudden drop.

The very expensive solution to this challenge is to have traditional generating stations or quite inefficient and environmentally-unfriendly diesel generators on hand ready to ramp up power generation to make up for troughs in wind generation. A far superior solution is open cycle gas turbine (OCGT) generating technology.

Fast, flexible, open cycle technology, while expensive initially, is far more efficient, cost-effective and environmentally sound in the longer term. It works like a jet engine, with the gas powering the turbine and generating electricity very quickly. This rapid turnaround time is what network companies such as Eirgrid need, but the technology is not being used as yet.

“We have planning permission and grid connections for three 100MW OCGT plants in Athlone, Kilkenny and Clare and are ready to go with them”, says Martin. “Demand for electricity is down at the moment and the country actually has a surplus of electricity so there is no pressing demand for them as yet.

“However, our view is the sooner we have them the better and they will probably be built over the next three to four years. It makes an awful lot of sense to build them. They are stand-alone, very fast-acting generating plants which are now extremely efficient, coming in at around 40 per cent.”

At present, Ireland’s total installed wind capacity is in excess of 8,600MW with some 1,800MW of this accounted for by renewables, about 1,500MW of which is wind. However, given this is greater than our needs, how can BGE or anyone else justify a development programme which will see at least 500MW added to this total, with the possibility of a further 300MW in the form of OCGT plants added to this capacity?

The answer lies in the requirement to replace existing cost-effective plants nearing the end of their useful lives.

“Every plant has a lifetime and there comes a point that it has to make way for new, more efficient solutions. You have to plan ahead for that. We are in this business for the long term and that’s why we have a five-year development pipeline and those assets will last 20 years when they are built.

“But it is not really possible to look beyond that five-year horizon at present. If Ireland returns to a growth path during that period, we may be looking at further investments, both in renewable and in other forms of generating plant, but it’s too far out to predict at the moment.”

Another factor which will affect future planning is Ireland’s imminent connection to the European power grid. “We will have interconnection with the rest of Europe from next year,” he notes.

“This will certainly have an impact in that it will give us access to competitive power from Europe and will put pressure on inefficient plants. Also, the view from the UK is Ireland could be an exporter of cheap wind energy. We could be part of Ireland’s next export success story.”

BGE also has a number of strategic investments in tidal, ocean and micro-generation companies, as well as in RD in biogas and smart metering.

“Our vision is rooted in the delivery of sustainable energy solutions for our customers”, says Martin. “We are demonstrating our commitment to the development of a green energy future through our investments in various proven and emerging energy related technologies.”

In 2008, the company launched a €10 million Alternative Energy Research and Development Fund, to identify and promote new energy ideas in Ireland. A number of investments have been made from this fund in areas such as ocean energy, biomethane production and micro generation technologies.

“Our message to our customers is that Bord Gáis Energy is now a true energy company and we are here for the long haul in terms of developing and providing a sustainable future for the country’s energy needs,” Martin concludes.