EIB Invests €500M in Irish Electricity Sector
October 1, 2009 // Published as a news service by IHS
The European Investment Bank (EIB) agreed to fund up to €500 million in loans signed on Sept. 28 to help Ireland secure and "green" its electricity supplies and support Europe's economic recovery through renewable energy projects.
EIB will lend EirGrid up to €300 million towards construction of a 256-kilometer cable between Ireland and Wales. The East-West Interconnector (EWIC) will underpin the development of renewable energy by enabling the import and export of excess wind power. It will improve security of supply and facilitate competition through connecting the Irish electricity market with the rest of Europe.
In addition, the Electricity Supply Board (ESB) will receive up to €200 million in loans to develop its renewable energy business by installing 248 megawatts of wind power capacity by 2012 in various locations. The total cost of the investment program is estimated at €475 million.
The loans bring total EIB support for Ireland in 2009 to €760 million, almost double 2008's total of €450 million.
"Ireland is very dependent on imported fossil fuels but has huge potential for wind power. Both these projects help Ireland in its ambition to go green and secure future energy supplies, helping Europe as a whole meet its climate change goals," said EIB vice president Plutarchos Sakellaris.
"The EIB is particularly happy to be able to support EirGrid and the interconnector, which was identified as key project in the European Economic Recovery Plan endorsed by EU leaders last year. The ESB loan is also our first to the renewables sector in Ireland, where we hope there will be many more opportunities for cooperation in the future," Sakellaris said.
Eamon Ryan, minister for communications, energy and natural resources, said, "I warmly welcome this investment by the EIB in Ireland's energy future. We are transforming energy policy in Ireland and today's investment will propel this transformation. I congratulate both EirGrid and ESB and know they are ambitious semi-state companies who deliver on their commitments. I look forward to the completion of these projects. We are well on the road to Ireland becoming world leader in green energy and the fight against climate change."
Padraig McManus, ESB's chief executive officer, said, "ESB is engaged in a major investment in renewable energy to realise its ambition of becoming carbon-neutral by 2035. We are expanding our wind portfolio to 600 megawatts by 2012. By 2020, one-third of ESB's generation will be wind-based. Today's announcement is part of that strategy."
EirGrid's chief executive Dermot Byrne said, "Today is a major milestone for Ireland's electricity infrastructure and for our power market, with the signing of this very important tranche of funding for the East West Interconnector project. When completed, the interconnector will help ensure secure electricity supplies for consumers, it will promote competition and will enable power to be efficiently transferred between Ireland and Britain, providing Irish wind producers with access to export markets."
The European Economic Recovery Plan, approved by the European Parliament and European Union (EU) ministers in July, proposed spending €4 billion in 2009 and 2010 on key energy projects to help counter the effects of the financial crisis on the real economy. It allocates €110 million for the Ireland-United Kingdom interconnector.
The total cost of EirGrid's project is estimated at €601 million. Engineering group ABB has been awarded the contract to design, manufacture and install the interconnector. EirGrid expects the project will result in approximately 100 jobs in Ireland and 100 jobs in Wales during the construction phase. The project is due for completion in 2012.
Ireland currently meets 95% of its energy needs through imported fossil fuels. The government has an ambitious strategy to meet 40% of electricity consumption from renewable sources by 2020. EIB staff will attend the Irish Wind Energy Association's autumn conference on Thursday to learn more about future wind power projects in the country.
Background
The European Investment Bank is the bank of the European Union. It was set up under the 1957 Treaty of Rome with a mandate to support EU policies. It has six priority areas for its lending: poorer regions, the environment, transport and energy networks, small and medium-sized enterprises, innovation and research, and secure and sustainable energy supplies.
In 2008 it signed loans for €57.6 billion, of which €51.5 billion was for projects within the EU's 27 member states. To help cushion the impact of the economic and financial crisis, the EIB has raised its EU lending target for 2009 to €70 billion. For more information, see the EIB web site.
EirGrid plc is a leading Irish energy business, dedicated to the provision of transmission and market services for the benefit of electricity consumers. It is a state-owned commercial company. EirGrid holds licenses as independent electricity transmission system operator (TSO) and market operator (MO) in the wholesale trading system in Ireland, and is the owner of the System Operator Northern Ireland (SONI Ltd), the licensed TSO and MO in Northern Ireland. The Single Electricity Market Operator (SEMO) is part of the EirGrid Group. For more information, see the EirGrid web site.
ESB is the state-owned electricity company of Ireland. It is a vertically integrated utility, providing electricity generation, distribution and electricity supply, with an annual turnover of €3.5 billion and activities in 100 countries. ESB is currently implementing a multi-billion euro capital investment program to make the company carbon-neutral by 2035. Half this investment is directed at promoting renewable energy generation. The plan also involves major investment in its electricity networks infrastructure to facilitate greater renewable energy on the system, the development of a recharging network for electric vehicles and the implementation of a smart metering project. For more information, see the ESB web site.
Source: European Commission (EC).