Public to foot €650m bill for ESB upgrade

Householders and businesses are likely to foot the bill for a €650 million upgrade to the Republic's electricity network that the Government believes is needed to hit green energy targets.

Minister for Energy Eamon Ryan yesterday launched the findings of a comprehensive study of Ireland's electricity grid. The report states that the country could produce 42 per cent of its power from green sources, such as wind, by 2020.

The study found that this will require an investment in the electricity transmission network of €650 million for the Republic, and just more than €1 billion for the island.

An overview of the document published yesterday states that "these additional costs will need to be recovered within the price of electricity charged to end users".

Just less than €1 in every €4 charged for electricity in the Republic pays for the national grid, which is used to transmit power from generating plants to the distribution networks that deliver it to customers.

Under the all-Ireland electricity market system, introduced last November, there are other fixed charges designed to cover some costs faced by power generators. In other EU countries such as Germany, electricity users have ultimately had to bear the cost of initiatives designed to support the development of renewable energy.

In the Republic, State-owned ESB is the only supplier that provides power to households. The Commission for Energy Regulation sets domestic prices every October. The regulator can take into account factors such as network investment when deciding on the charges.

Mr Ryan stressed yesterday that investment in the power grid and infrastructure is needed for the country's long-term benefit.

"We have to make the decision today to that will shape the country in energy terms for the next 100 years," he said.

The Oireachtas committee on communications, energy and natural resources is due to discuss the study and the options for upgrading the grid. No date has been set for any work to begin.

The Government has set a target of producing one-third of all the Republic's energy needs from renewable sources by 2020. Mr Ryan said the grid study demonstrated that this could be exceeded.

In a separate development, it is understood that the Government is preparing to allow the State's national grid operator, Eirgrid, to borrow up to €500 million.

The cash will be used to fund the proposed power connection linking the Irish and Welsh coasts, and to pay for the ongoing development of the systems it uses to manage the all-Ireland electricity market in partnership with its northern counterpart.

The ESB owns the grid but Eirgrid, a separate body, manages it.