Electricity prices could rise 15% over surplus plants

Electricity prices could rise by 15-25 per cent if large amounts of wind energy are added to the electricity system, ESB National Grid has warned.In its starkest warning yet, the company which manages the national grid said urgent decisions were needed from the Government and the energy regulator on what to do about wind power.

The company's managing director, Mr Kieran O'Brien, explained that "surplus" electricity plants were needed to back up wind energy when it failed due to weather conditions. He was speaking after ESB National Grid issued a study on the economic effects of increased wind energy.

He said major costs were associated with having such surplus plants and these costs would ultimately translate into higher prices for domestic and commercial customers. He stressed however that electricity prices were ultimately a matter for the energy regulator, Mr Tom Reeves.

ESB National Grid is owned by ESB, but operates as a separate business unit. It is due to be called Eirgrid once agreement has been reached with ESB staff transferring from the main company.

Mr O'Brien said wind energy was inherently unpredictable and when it was not available, other conventional generating plants had to fill the gap. He said extra costs arose because these plants were often brought on stream for short periods. He said this placed "additional stress on existing plants" because of the "stop-go" nature of the arrangement.

It is estimated that 210 megawatts of wind power is already on the national grid; contracts have been signed for another 598 megawatts and about 800 megwatts is due to go on the grid in future years. There is a moratorium in place on new wind turbines connecting to the national grid.

Speaking about potential price rises, Mr O'Brien said: "Based on some plausible scenarios, electricity generation costs are likely to increase by between 15 and 25 per cent. In the event that these costs are passed on to electricity consumers, most of this increase will be evident to large industrial users. A smaller percentage increase will apply to domestic customers," he said.

Mr O'Brien said policy-makers needed to face up to the serious questions about wind energy. He said the question of whether wind should be given priority regardless of the economic impact on electricity prices needed to be asked. But he emphasised that ESB National Grid was commited to facilitating more wind energy generation.

Mr Paul Dowling chief operations manager of Airtricity, said there was an interconnector with Northern Ireland which allowed power to be imported into the Republic if needed. He said the Republic's national grid could not be taken in "isolation".