EirGrid warns of electricity shortages

The national grid yesterday warned of electricity shortages if no new power stations are built by 2005.

The grid company, EirGrid, said "immediate action" was required to promote investment in in power stations because construction work on a new plant takes two to three years to complete.

Despite rising electricity prices, the provision of investment in the business has not grown with electricity demand forecasts. EirGrid called for the provision of a new large-scale plant without delay.

It has reported that demand for electricity in the domestic network had reached an all-time high of 4,147 megawatts nine days ago, beating a previous peak recorded last December.

EirGrid is being separated from the ESB as the market opens. While the growth in demand for electricity would fall during the economic downturn, it said two new new big power stations were required by 2009.

Urging the introduction of incentives to attract investment in the industry, the EirGrid managing director, Mr Kieran O'Brien, said: "It is evident that the current market arrangements are not attracting sufficient new investment in generation."

He added: "There must be some concern in relation to the future certainty of supply in the short term."

The electricity industry was opened to competition in 2000 but only one group, the former Northern Ireland monopoly Viridian, has emerged as a major competitor to the ESB in the generation market.

The State company is effectively precluded from building a new plant of its own because it is required to reduce radically its market share. Despite two electricity price hikes in two years, private-sector groups are shying away from the generation market.

EirGrid cited the "major detrimental effect" of low plant availability and said a large-scale plant, which could operate without limitations on fuel supply or on the transmission grid itself, was required.

Responding, the energy regulator, Mr Tom Reeves, said yesterday that he was assessing "special arrangements" to foster investment.

In plans under consideration since October, is is understood Mr Reeves is looking at giving block contracts to new investors to sell power on to the ESB. Another option is to pay plant owners for unused capacity at their power stations.

Mr Reeves said a decision would be taken by the end of the year. In addition, his office had brought forward by three years a review of the trading system for power.

About five groups have planning permission to build new power stations but their projects are stalled due to doubt about the structure of the liberalising market.

It is believed Mr Reeves is hoping to ensure that at least one of those initiatives proceeds.