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December 2019

Nov

ESB announce peat plant closures

Joe Camish
Joe Camish
27 November 2019

In our latest edition of the Irish Energy Market Bulletin we spoke about the recent announcement from ESB concerning the closure of two of its peat-fired power stations – West Offaly in Shannonbridge and Lough Ree in Lanesborough. In a statement, ESB noted after considering a number of factors there would be no viable business model beyond 2020 and therefore both plants will cease generation at the end of December 2020. The news also means the end of ESB’s association with power generation solely from burning peat in the State.

With a combined capacity of 235MW (West Offaly (135MW) & Lough Ree (100MW)), both plants were built in 2004, and could have expected an economic life of at least 25 years – out to 2029. It is likely they could have operated for longer, with appropriate maintenance and refurbishment. However, the plants will become uneconomic to run in 2020, as the element of the Public Service Obligation (PSO) levy which collects the subsidy for peat-fired generation comes to an end on 31 December 2019.

The impact of these closures will see an increased need for stable generation in the SEM, with West Offaly awarded a one-year contract in the 2022/23 T-4 capacity auction. This will see the Capacity Remuneration Mechanism (CRM) having to acquire additional capacity, and with less subsidised synchronous generation will mean greater market opportunity for CCGT’s to pick up the market share of the two plant.

Reducing peat generation emissions is low hanging fruit for the Irish government on reducing emissions, the next challenge will be closing coal fired capacity. Such an ambition might be tricky especially for plant such as Moneypoint, where there are currently no alternatives. In addition, any transfer to biomass could be fraught by higher costs compared to traditional renewable generators such as wind and solar, so meeting renewable generation targets and reducing emissions will be more effectively met by increasing wind and solar capacity.

 

The above extract has been taken from our Irish Energy Market Bulletin, and if you have enjoyed reading this article and want to read more about the latest developments in the Irish and Northern Irish energy market, please contact Joe Camish, j.camish@cornwall-insight.com,  for more information.

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