Following the announcement of a €22 billion investment strategy, ESB Chief Executive Padraig McManus outlines to EM the company's aims to develop renewables, cut emissions and expand its international operations.
Powerful plans
Esb's new strategy, which will see major investment in developing the networks and generating plants, is the biggest infrastructural investment of its kind in Ireland. The plan involves a spend of €22 billion in developing ESB's assets, reducing to net zero its carbon emissions by 2035 and dramatically increasing its use of renewable energy.
A total of €4 billion will be invested in the expansion of the international business.
While the plan extends to 2035, most of the investment will take place between now and 2020. Meanwhile, ESB is in the process of divesting 1500 megawatts of its older plant under an agreement reached with the Energy Regulator.
The radical programme involves the construction of wind farms with the capacity to produce 1400 megawatts that will be backed up with open cycle plants.
ESB Chief Executive, Padraig McManus, explained to EM that the plan is 'aggressive' but says the company has always responded rapidly to meet changing demands of the market.
"It is actually important for us to go back to the start of ESB and look at what the company has achieved and how it tackled its many major challenges. Beginning with the construction of Ardnacrusha, the very foundation of ESB and moving on to the era of the peat stations using indigenous fuels, we see exactly what ESB managed to achieve in its early days," he said.
"When demand for electricity grew rapidly in the 1960's, we rose to meet that challenge with new generation. When Ireland rightly became concerned at the risks inherent in an economic overdependence on oil, we developed the Moneypoint station. At the time, the venture stretched ESB 40 April 2008 www.esb.ie/em financially, but the company achieved its goal."
"Through the extensive growth period of 1990's, ESB was required to meet rapidly expanding market demands. The big investment that we have made, in rebuilding our networks over the last number of years, was a remarkable achievement," he added.
ESB's latest development plan represents another major challenge for ESB and one that will also be met.
The company has traditionally looked at a five-year period when preparing strategy but, on this occasion, ESB is looking at the next three 5-year periods.
The Company sees itself as a leading commercially successful, environmentally responsible utility and Padraig McManus is adamant that it will continue to be that.
"We want to have world class sustainable networks and we're well on the way to that. We want a renewable business of scale. We want best practice in our generation portfolio. We want a customer-focussed Supply business and we want a significant International sector. Our commitment in relation to carbon is that we would reduce carbon emissions by 30% by 2012, by 50% by 2020 and we will get to net zero carbon for ESB's Power Generation business on the island of Ireland by 2035," he said.
The Chief Executive believes that, long before the term Corporate Social Responsibility came into daily parlance, ESB was one of the best companies in Ireland in that regard.
"But we have become more formal in relation to it and we will continue to do that. We want to grow, we want to be strong, we want to care for society and the community and we want to work in partnership with people – and people are our customers and our staff. We want, whatever ESB does in the future, to be part of Ireland's commitment to the environment going forward."
In its proposal to get to net zero in carbon by 2035, and while honouring its commitment to maintaining its market share to below 40%, ESB intends to have 600 megawatts of new wind generation on the island of Ireland by 2012.
"By then the oil stations will have gone, certainly they will be out of our hands, and these two things alone will reduce our carbon footprint by 30 per cent by 2012," says Padraig McManus.
"Our target is to develop 1400 megawatts of wind and 150 megawatts from ocean energy. We recently made an investment through ESBI in one of the first tidal projects – the first tidal project to be actually connected to the Grid and selling power to customers. Even though we will not be developing new conventional plant during this period, we are proposing to develop 500 megawatts of open cycle gas turbines, to stand behind our investment in wind, and to give the wind that security in terms of what it delivers," he said.
"In order to reach net-zero by 2035 Moneypoint will have to be replaced and when it is replaced it will have to be with a clean coal station."
Doing that and getting the carbon capture from the new clean coal plant will reduce ESB's CO2 emissions to 2 million tonnes – from the current level of about 15 million tonnes. While that is as close as it's probably possible to get, it is planned to manage the remaining 2 million tonnes with offsets in whatever systems are available at that time.
The company is also planning to invest in new renewable technologies and in projects where there are opportunities – photo voltaics, solar and eco innovation and how micro generation will be integrated onto the system. These are developments in which Padraig McManus explains, the company is going to have to investigate aggressively.
"The renewables – wind, ocean and biomass are things we are going to have to address," he adds.
The Chief Executive is adamant that the financial strength of the company must be maintained throughout this period and that partnership is an imperative.
"This is going to affect everybody in the company. We've committed ourselves to working in partnership. The resources needed to achieve the targets that we are setting ourselves are going to be great as well. A lot of effort is going to have to go into that area and our owners are very supportive of the Strategic Framework which we have established for ESB."
So what is ESB actually going to do? "In terms of Networks, we are going to continue with the infrastructure delivery," he says.
"The Business Units will have to manage sustainability in terms of The Last Word the way we do our own business and I've appointed John Campion to head up a project for a period of 12 months in relation to that. At the end of that period it will revert back to the individual business lines. We have to prepare to tackle the issue of energy efficiency and we have a target to achieve the Government's programme of 20% reduction by 2020. To achieve this is going to be a big challenge but we are ready for that task."
In terms of how the spend is allocated, the Chief Executive says €4 billion is being targeted for the development of renewables; €11 billion for the development of Networks: €3.5 billion towards the domestic generation market and €4 billion for the continued development of ESB International which the company sees as essential to its growth.
"So the investment of €22 billion is certainly a challenge but it is going to position ESB as a really strong company going forward. We are making a very public commitment and we always deliver on our commitments. We are going to deliver this time. It is going to involve a huge shift for us, a huge challenge for us but one that I'm very confident we will to deliver."
EM
