ANN CAHILL: ESB expands internationally to ensure survival

THE ESB is in a race to survive and its chances of success depends to a large extent on its overseas operations.

ESB International has been bidding for and winning foreign contracts for more than 25 years, but the past few years has seen it pushing the frontiers harder and faster.

The man responsible for this is Michael McNicholas, not quite an ESB lifer but the Mayo engineer has been with the State-owned company for 26 years.

Forced by the Government and the EU to share the Irish electricity market with competitors, the ESB is limited to 40% of the country’s power generation business.

But this will change in the next decade when the Irish and British market for electricity becomes one thanks, to the planned interconnectors. But as of today, the ESB’s total share of the dual markets is a paltry 5%.

Mr McNicholas readily agrees that this will not be big enough to ensure the survival of the company. So it has plans to grow in the meantime and aims to have a 20%–30% share of the combined markets by the time they are united.

“It is very critical that we get some scale in Britain,” says Mr McNicholas. The ESBI is developing one of the cleanest and most efficient gas-fired plants to supply up to one million homes at Marchwood near Southampton with its partners, Scottish and Southern Energy plc and owns a 50% share of a plant at Corby with German giant EON.

Mr McNicholas was general manager of power generation and was in customer supply before taking over ESBI in 2005. This international arm generates and supplies electricity, its management and engineering and invests in conventional and renewable energy.

It employs over 1,200 people, had an annual turnover in 2007 of €805 million and has completed projects in 115 countries.

Currently it runs seven power stations, including a 70% share of the Synergen natural gas plant at Ringsend, two plants in Malaysia and two in Pakistan with a team of Irish managers in both.

Vietnam was one of the first ESB overseas ventures. When the US left, therewas an embargo on doing business with the war-worn country but the ESB dismantled and shipped them the old Poolbeg plant for a nominal sum, and now operates two plants there.

More recently it has gained a foothold in Spain where it jointly owns a plant and manages its operation and maintenance. Earlier this month it announced a €500m deal to build a plant in Asturias on the northern Spanish coast. It is also involved in wind and solar ventures there.

The facility management business employs more than 400 professional engineers in Dublin providing engineering services to the ESB and to Escom in South Africa where they completed a 1,000MW gas-fired plant — with a difference.

It had to be completed very quickly as the country was experiencing black-outs that were affecting not just the everyday life of the country, but foreign investment. It was completed ahead of schedule and ESBI is now involved in a 100MW wind station there.

Mr McNicholas believes ESBI has one of the strongest cores of engineering in Europe, an increasingly rare asset today given the world wide shortage of engineers, he points out.

Their latest Irish venture is in harnessing tidal energy at Strangford Lough — the first in Ireland and one of the first in the world to use the tide to generate electricity. In some ways this is a return to their roots at Shannon’s Arndacrusha hydro-electric plant.

“Ardnacrusha was so far ahead of its time, and we are back there again — doing things that we did not do for years, competing. We use old and new technology, we are small enough to innovate.

“Thanks to deregulation we are a very fit company. Our job is to make money. That is the first question I ask of a proposal — will it make money? ESBI competes — we do not get subsidies so every project has to pay its way,” he said.

They have a keen interest in renewable power sources and are constantly looking for emerging options.

“They are not all going to work, but it’s my job to have them as a significant part of the business in twenty years time,” he said.

It is investing €6.7m a year in this area and into making it work. He is convinced that the future of energy generation is solar and ocean and points out that Ireland has access to one of the best oceans in the world. “We intend to make it happen.”


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