The wind revolution

Bord Gáis is well known for its Big Switch campaign and its position in the energy market – but its work in the renewables sector is just beginning

THE EMERGENCE of Bord Gáis as a significant player in Ireland’s electricity market may only have come to the attention of the general public with the launch of its Big Switch campaign for domestic electricity customers last year, but this merely marked the company’s entry to the consumer marketplace; its journey to becoming a broadly based energy company started long before that.

Indeed, Bord Gáis has been selling electricity to industrial and commercial clients for many years, but its first serious move into the space came with its decision in 2006 to develop its own €350 million state-of-the-art combined cycle gas turbine (CCGT) power generating plant in Whitegate, Co Cork.

Bord Gáis director of assets Dave Kirwan was working on the development of the company’s gas business in Northern Ireland at the time. “I came back to Cork to manage this project,” he recalls. “Our gas network business was very well developed and served, but as an energy business we needed to think into the future. We always had it in mind to transform from being a gas company to being a dual energy business and this marked the beginning of that process. Whitegate was the facilitator for the Big Switch, it gave us our own asset to be competitive in the electricity market. But it was never going to stop there. Our strategy was to develop a portfolio of electricity generating assets and a key decision at the time was to set up a small group to look after that portfolio. Our ambition was to develop the electricity side of the business to the point where its earnings would mirror those of the gas network side.”

According to Kirwan the Whitegate generating station is the most advanced and efficient power station in the country. When he took the helm of the project in March 2006 all that was in place was an agreement with Conoco-Phillips – the owners of the site – for the lease of 25 acres for the purpose of building the station. By the autumn of the following year all permissions and licences were in place and contracts were signed with GE and Gamma for its design and construction. The plant began generating electricity early in 2010 and went fully commercial in October of that year.

While four years from greenfield site to fully commercial power station is efficient by any standards, it is the plant’s operating efficiency that animates Kirwan. An electronic engineer, Kirwan came to Bord Gáis after several years with ESB and its international consulting wing ESBI and he is very proud of what Bord Gáis has achieved in Whitegate.

The plant is running at in excess of 58 per cent efficiency; that is 58 per cent of the energy value of the gas used is converted into electricity. Kirwan puts this in context: “The old power stations the ESB operated years back ran at between 31 and 35 per cent. Combined cycle technology came into the market about 20 years ago and 40 per cent was then seen as good, 58 per cent is world-class.”

Kirwan sees Whitegate as the first building block in the company’s portfolio of electricity assets. “The next natural steps are wind and fast flexible open cycle gas turbine generation,” he says. “CCGT plants are built for efficiency and longevity. They are put up and they stay up generating power very efficiently over a long period. But electricity markets don’t work much like that. There are peaks and troughs in demand. Wind is very different to CCGT, it goes on and off and there needs to be something in between the two.”

This is the so-called “spinning reserve” capacity we hear so much about in the whole wind energy debate. While Ireland is blessed with the best resource of wind in Europe the problem is that you can’t rely on it all the time. If the wind stops blowing so does the power generation. The very expensive solution 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.

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. This is something Kirwan feels passionately about.

“The market isn’t ready for this technology yet,” he says. “The market behaves as if all electrons are equal and simply pays for electricity generated. But all electrons are not equal. The market at the moment works in a way that makes it more desirable to buy secondhand diesel generators than to put in sustainable solutions for the future. We have invested a lot in preparing for the introduction of fast and flexible technologies like these, but we cannot move until there is a return on the capital investment for us. We are having the conversations with the various stakeholders and trying to influence matters and hopefully we will see a change in time.”

The key point here is that a relatively inefficient diesel engine can appear a reasonable solution now, when diesel prices are relatively low. But what will the situation in five or 10 years’ time be, when diesel prices are far higher and we have a much higher wind energy component on the network than currently?

“The problem with the energy utility sector is that the business model has not really encouraged innovation over the years,” says Kirwan. “Another issue is the length of time it takes for things to happen. If you miss out on something it can set you back 10 or 15 years. That’s what we are facing into now if we don’t get things right.”

The company is moving ahead rapidly in the wind area, however. “The wind revolution started in Ireland quite a while ago and to a certain extent it left the utilities behind. They had to be dragged, kicking and screaming, to it. But if the utilities don’t adapt and innovate they will be replaced. Game-changing technologies come along in every industry. We have seen it in music, we have seen it in communications and we are seeing it in energy. If the utilities don’t adopt those technologies and adapt to the new environment, they won’t survive.

“We are going to see smart metering in every home and business and consumers will be able to choose what type of power they are going to buy from which company and when. We will have to deal with that and we will have to deal with changes at the generating and distribution ends as well.”

Bord Gáis initially invested in two small wind farm projects in 2008 in order to learn about the industry from the inside. “We did a lot of learning on these two projects and once we were comfortable with the area we purchased the SWS wind energy business in 2009. This came with a development pipeline of 600Mw of wind power and was a fully fledged business with a fantastic group of young engineers and other professionals working for it.

“I spent 2010 integrating it into Bord Gáis and it is now part of our new Assets Division. We now have 65 people in that group operating out of Lapp’s Quay in Cork.”

Given that Ireland’s total electricity market is roughly 5,000Mw at peak and the 2020 target is to have 40 per cent of this produced by renewables, developing the whole of this 600Mw pipeline would give Bord Gáis almost 12 per cent of the total market and a quarter of the renewables segment.

“The challenge now is to execute the projects and to bring them in safely, efficiently, on time and on budget,” he says. “Our target is to have 500Mw online within the next four years. However, there is a degree of uncertainty regarding the planning regime and other aspects of the wind sector. We need more clarity and certainty there. There isn’t a bottomless pit of investor confidence or money out there.

“I am very optimistic for our own future as long as we continue to innovate and adapt and I am confident for the future of Ireland’s renewables sector as well – but we need more joined-up thinking at a national level. We need a clear national energy policy which takes into account all aspects of the process from planning through to grid connections.”