Upgrade of plants to cost Endesa €450m

SPANISH UTILITY Endesa plans to spend €450 million on upgrading two of the ESB power plants it agreed to buy last year.

Endesa and the ESB yesterday formally concluded the sale of four of the State company’s electricity generating plants to the Spanish group.

In July, the ESB agreed to sell Great Island in Wexford, Tarbert in Co Kerry and two smaller plants in the midlands for €450 million.

Yesterday’s conclusion of the deal marks Endesa’s entry to the Irish market, where it will be the island’s second biggest utility after the ESB. Endesa’s chief executive, Rafael Miranda, will meet Minister for Energy Eamon Ryan today.

Endesa told The Irish Times yesterday that it intends spending the same amount again on upgrading Tarbert and Great Island.

Celia Ordóñez Gómez, deputy managing director, Endesa, said the company intends replacing the existing plants at both sites with modern gas-fired generators.

Endesa will replace the 260 megawatt (mw) plant at Great Island with a 420mw generator. It intends building a new 300mw facility in place of the existing 600mw generator at Tarbert.

This will cut Endesa’s overall Irish capacity, but the new generators will be more efficient than the existing plants. The new plants will also cut the Republic’s greenhouse gas emissions. Tarbert and Great Island burn heavy fuel oil to generate electricity, which produces high quantities of carbon. The modern gas-fired facilities will be far cleaner.

Endesa will continue to operate the plants while it is building the new facilities, which it indicated should be completed in 2012.

Around three-quarters of the 188 staff working in both facilities have agreed to transfer to Endesa from the ESB. They will receive payments of close to €2 million from the State company for moving to the facilities’ new owner.

Endesa has experience in taking over older power plants and upgrading them. Between 2000 and 2008, it took over a range of generating plants in Italy.

Between that point and last year, Endesa’s investment boosted earnings from these plants to €800 million a year from €300 million a year. It subsequently sold them to German giant Eon.

Endesa will initially begin selling the electricity it generates into the “pool” through which most of the power generated in Ireland is sold to suppliers and on to their customers.

Endesa will also develop a strategy for marketing and selling its power and will continue to look for opportunities to expand in Ireland. Endesa was one of the parties that began talks with Arcapita to buy the Viridian power plants in north Dublin. However, the sale of these facilities has since halted.

ESB chief executive Padraig McManus yesterday welcomed Endesa’s entry to the Irish market. “We are delighted that they are coming into the market with their reputation and we look forward to competing with them,” he said.