Power plants may be forced to close in bid to cut cost of electricity grid
Several power plants are expected to shut down under plans by the energy regulator to reduce the cost of guaranteeing the lights remain on.
As much as 20pc of the total capacity available (2,000 megawatts of power generation) will be taken off the system by 2024. It is part of a new system aimed at lowering the €515m annual capacity payments bill, the Irish Independent has learned.
In the electricity market, generators are paid for the energy they produce - but they also receive a capacity payment for being available to produce during periods of high demand.
This in effect acts like an insurance policy to ensure that electricity continues to flow when needed.
But a new system will require generators to bid into an auction process, with only the lowest-priced stations winning contracts.
This means that some plants will not remain commercially viable if they don't secure capacity payments in the new market.
National grid operator EirGrid said it was possible that those which didn't win contracts would go out of business.
"It is possible that some generating units that fail to secure capacity payments may not be commercially viable," a spokesman said.
The company said the amount and timing of the reduction was "uncertain".
Not until after the auction takes place later this year will it emerge which plants risk closure, sources said. It was also not clear as to how much capacity payments will fall by, and whether consumer electricity bills will reduce.
However, EirGrid said the new market would be "more efficient and competitive".
Currently, some 6,878mw of power is needed across the island. There is 10,000mw of capacity available. This will fall to 8,000mw by 2024. The changes are being introduced under EU rules.
Wind generators receive the least amount through capacity payments, around 7pc of the total spend of €515m. Peaking plants, which are only occasionally used, receive the most. In some cases, some 30pc of peaking plant revenues were generated from capacity payments.
The Commission for Energy Regulation has said that some plants may not remain commercially viable if they do not secure capacity payments.
It has noted that in 2015, peak generators - or those generating power during periods of high demand - accounted for just 1pc of all power generated, but received 13pc of total revenues under the existing system, or more than €60m.
While some plants, including Tarbert in Kerry and North Wall in Dublin, are already earmarked for closure, because they are old or cannot meet EU emissions directives, others risk being put out of business.
Among the peaking plants are Huntstown and Poolbeg in Dublin, Tawnaghmore in Co Mayo, Tynagh in Co Galway and Rhode in Co Offaly.