Sale of ESB assets could affect long-term competition: Report

The International Energy Agency has expressed reservations about the Government’s plans for a limited sale of non-strategic ESB assets which it warned could affect on sustainable long-term competition in the energy market.

In a major review of Ireland’s energy policy, the IEA said the further sale of more of the ESB’s non-core generation assets would lead to greater flexibility and competition in the energy market.

Although the report, which was published yesterday, welcomed the Government’s plans to sell Bord Gáis’s retail division and some of ESB’s non-strategic generation assets, it remarked on the high level of the State’s ownership of energy companies, which also include Bord na Móna and Coillte.

“It is not clear that having multiple, wholly state-owned participants in the energy sector leads to the optimal outcome for the consumer,” the IEA report states.

The Paris-based organisation said consumers should not be faced with higher costs as a result of the Government’s intention to retain ESB as a vertically integrated business involved in electricity production and supply, as well as networks.

Overall, the IEA praised the Government for adhering to ambitious energy targets at a time of a severe economic downturn.

However, it warned that Ireland must still invest further in renewable technologies, expand grid integration, and improve energy efficiency as it moves towards being a low-carbon economy.

IEA executive director Maria van der Hoeven said the group was convinced implementation of its recommendations would benefit the Irish economy.

The IEA noted that Ireland had set one of the most demanding targets in the world by seeking to produce 40% of its electricity from renewable sources by 2020. Wind power currently accounts for 15% of total electricity production.

However, it stressed that Ireland’s dependency on imported oil and gas would remain an issue in the long term.

The IEA highlighted the vulnerability of gas supplies as 93% of gas is imported through a pipeline connected to Moffat in Scotland as well as the uncertainty about the future of the country’s only oil refinery at Whitegate, Co Cork, after 2016.

However, it noted that the development of the Corrib gasfield and a proposal to build liquefied natural gas terminal in the Shannon Estuary would improve the security of future gas supplies, while it claimed the absence of an oil refinery should not pose a significant risk.