Pipelines may lead to cheaper electricity

THE construction of two electricity pipelines between Ireland and Wales, given the green light yesterday, could lead to cheaper electricity.

The cables will be capable of carrying 20% of Ireland's current electric power capacity and will open the Irish market up to competition from Britain.

Natural Resources Minister Dermot Ahern has given the go-ahead for two 500 megawatt interconnectors to Wales.

The minister said he would like to see more competition and the move could attract new players and eventually lead to lower electricity prices. The new power to come on stream from the interconnector is equivalent to 20% of the current supply.

The pipelines will cost about €185 million each and construction is expected to start in 2006 and be completed by 2008. No public money will be available for the project, though, Mr Ahern said that any bidders to build the pipelines may be entitled to some EU funding.

He said: "I will be asking the Commission for Energy Regulation to promote the development of 'merchant' interconnectors to be constructed, managed and owned by the private sector. In the event that the market does not respond, I will ask the CER to host a tender competition for construction, management and ownership of regulated interconnectors."

He said that he was preparing legislation to allow for an interconnector not owned by the ESB to be built. The State-owned utility will not be blocked from the tender process.

Electricity demand in Ireland is growing at a faster rate than in other EU countries and there are fears that the network does not have the capacity to meet that demand. Last year, a report from the national grid found that Ireland's power stations are operating at 78% of their overall potential the lowest level in a decade.

"By providing a potential 1,000 MW of additional electricity capacity onto the Irish grid, the interconnectors will provide many benefits, including enhanced security of supply, increased competition in the electricity market and integrate Ireland into the wider European energy market.

Eventually, he hoped Ireland would be able to meet excess demand in Europe and become a net exporter of electricity.

ESB chief executive Pádraig McManus said the decision would create a more stable energy infrastructure.