Electricity supply squeezes boost ESB hourly gross profits

Power plant shutdowns and low wind speeds fuelled prices of up to €490 per MWh

Four gas-fired generators owned by the State company were able to meet about half the electricity demand at times during the summer.

Four gas-fired generators owned by the State company were able to meet about half the electricity demand at times during the summer.

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ESB generating plants earned gross profits of more than €130,000 an hour during recent electricity supply squeezes, according to calculations based on energy market figures.

Temporary power plant shutdowns, low wind speeds and other issues meant four gas-fired generators owned by the State company were able to meet about half the electricity demand at times during the summer.

Figures show that the ESB plants sought prices ranging from €375 a mega watt hour (MWh) – the unit in which electricity is sold – to €490 per MWh on dates in July and September when electricity shortages were acute.

Generating electricity at the four plants – Aghada in Cork, Coolkeeragh in Co Derry, Dublin Bay and Poolbeg, in Dublin – cost between €90 MWh and €150 MWh.

Figures for Aghada indicate that between 4pm and 5pm on September 9th, the generator earned a gross profit €138,667 for electricity generated and sold.

On the same day, the analysis, provided by industry sources, shows that Dublin Bay earned a gross surplus of €132,151 between 3pm and 4pm.

The profits are gross figures, based on the difference between what it cost the plants to generate the power and the prices they received. They do not include other business costs.

Electricity margin

Some calculations indicate that the ESB increased the margin sought for electricity by 133 per cent over 2019 for Dublin Bay, 181 per cent over 2019 for Aghada, and 161 per cent over 2019 for Coolkeeragh, this summer.

ESB rejected these numbers on Thursday saying the average price it sought for electricity between July and September this year was €122 MWh, 30 per cent less than the market price of €161 MWh.

The State-owned group also pointed out that the customers buying power direct from its generating plants hedge or purchase most of their electricity a year or more ahead.

This means they pay far less for most of their electricity than the prices quoted on the various daily markets. Those customers include the ESB’s own subsidiary, Electric Ireland, which supplies energy to homes and businesses.

ESB pointed out that the maximum offer prices quoted were from intra-day markets, used to address short-term gaps between supply and demand, and which account for just 5 per cent of electricity traded.

“The bids submitted in these markets relate to small amounts of power and the value of this incremental power is generally higher,” the company added.

Market benchmark

However, sources argue that the intra-day prices sought by the ESB’s generators on days when wind speeds were low, ruling out competition from renewables, act as a benchmark for all markets, forcing up prices across the board.

The Irish Single Electricity Market (ISEM) requires generators to submit offers every day to generate power the next day.

Each provides a minimum charge and a “maximum offer”, the price at which a plant is prepared to generate the maximum amount of electricity.

ISEM ranks them lowest to highest. The most expensive generator needed to meet demand, at any point in time, sets the wholesale price for that period, which is dubbed the “cleared price”.

So, for example, on July 14th, Poolbeg’s maximum offer was €280.78 MWh while the cleared price at noon the following day was €276.12 MWh.

On September 12th, Dublin Bay offered €487.34 MWh while the cleared price at 5pm the following day was €385.87MWh.

Suppliers, the companies that provide electricity to homes and businesses, must accept the cleared price.

Those companies, including Electric Ireland, have blamed rising wholesale prices for increases in their charges ranging from 17 per cent to 34 per cent.

ESB and others say that a quadrupling in the price of natural gas on world markets since spring is the main driver of rising wholesale charges.

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