We are burning money when we use peat for electricity

It's a dirty fuel, it's expensive to run and the cost per job is financial madness. So why are we still using it?

DOES burning peat to create electricity make any sense?

On the face of it, it is economic and environmental madness. Burning turf to create electricity is so inefficient compared with burning gas, that two new ESB peat-powered generating stations in the Midlands will get a subsidy of ?44.3m next year just to break even.

The 2006 subsidy (which is called a Public Service Obligation) will add ?9.68 a year to domestic electricity bills. For small and medium-sized businesses, the PSO levy will add ?30.65 a year to bills, according to a new decision taken by the Energy Regulator Tom Reeves.

For 2005, the subsidy for the two stations amounted to ?54m, mainly to cover the capital costs of building them.

In fact, peat is the most expensive fossil fuel, which is why the Government got approval from the EU four years ago to put the PSO surcharge on electricity bills to subsidise it.

Calculations by this newspaper indicate that burning turf works out 39pc more expensive than gas when it comes to generating electricity in the ESB's two new plants.

So the punter is paying through the nose for peat power.

There is also the fact that burning peat pollutes like no other fuel. In terms of producing carbon dioxide or greenhouse gases, burning peat for electricity is about as good for the environment as an oil spillage.

Peat is the most carbon-intensive fossil fuel of all, releasing twice as much CO2 (carbon dioxide) as natural gas, according to the Irish Peatland Conservation Council and An Taisce.

This year Ireland, like many other countries, has had to start paying for the CO2 we are pumping into the atmosphere under the new emissions-trading system, which adds to the expense of peat power.

And peat is a rapidly disappearing resource which cannot be renewed any century soon.

Professor John FitzGerald, of the energy division of the Economic and Social Research Institute (ESRI), argued recently that the PSO support for peat-burning stations is expensive and works against the Government's commitment to meet reductions of carbon emissions.

"Burning peat to make electricity is bad business. The people of Ireland are paying a lot of money for these peat stations. I think the original logic was that it provides employment to the Midlands, but they are incredibly expensive jobs."

In the course of the past few years, six ageing ESB peat-generating stations have been closed by the ESB at huge expense in terms of redundancy payments. The six have been replaced by two modern stations.

Lough Ree Power was opened at Lanesboro, Co Longford, in April. At a capital cost of ?200m, it can generate 100 megawatts. Last month, West Offaly Power at Shannonbridge, Co Offaly, was opened by Finance Minister Brian Cowen. It cost ?240m to build and produces 150 megawatts of power.

It is 27pc more expensive to generate electricity from Lough Ree and 50pc more expensive to generate from West Offaly than a modern gas station, figures obtained by this newspaper indicate. Taken together, the two stations are 39pc more expensive than a new gas plant.

There is a privately-run peat-burning station in Edenderry, which recently got permission to also burn other materials such as bonemeal and wood chips. However, Edenderry, which is owned by British energy giant Powergen, does not receive a subsidy.

There has been a great reluctance to ditch the peat industry through the elimination of subsidies, as it is a major employer in the Midlands.

About 900 people are employed by Bord na Móna involved in the milling, harvesting and transportation of peat for the three peat-powered stations. Bord na Móna has secured a 15-year deal with the ESB to supply around 2m tonnes of peat to West Offaly and Lough Ree Power annually.

There are 82 ESB employees in the two State-owned peat stations. This level of employment in the two ESB power plants means that the subsidy for peat works out at around ?500,000 per employee to produce 250 megawatts of power. (This figure includes average annual salaries of ?72,000 a year for workers in the peat stations.)

Prof FitzGerald argues that the State should reconsider the contracts. There is full employment in the economy and the State is the main shareholder in both ESB and Bord na Móna.

"The question is whether the State would not be wiser as shareholder to say 'Right, we are prepared to get rid of these contracts and shut down that part of the operation and save a lot of money and save a lot of pollution and spend the money in creating far more jobs elsewhere'."

After all, ?44.3m, which is the PSO levy for next year, would go a long way to creating sustainable and environmentally-friendly jobs in the Midlands.

An ESB spokesman acknowledged that the generation of peat is more expensive, but said that the PSO was designed to recoup the extra costs associated with producing power from indigenous sources.

The spokesman added that peat was important in terms of fuel diversity and security of supply.

Bord na Móna defended the contracts: "Because of investment in new power stations, peat is now being converted at thermal efficiencies of around 39pc compared with the old stations which were in the low 20s. Therefore, we are getting much more power for the same amount of peat. Or less CO2 for more electricity."

Bord na Móna added that some years ago it reduced the price of peat for power generation by 30pc. "A combination of higher efficiencies and lower costs now make peat much more economic as a fuel, especially in light of recent oil and gas price increases."

The semi-state admitted that CO2 is an issue, but argued that Bord na Móna is also a carbon sink (restoring cutaway bogs to green areas, forestry etc.) and developing wind and other renewables.

Other proponents of peat argue that with crippling rises in oil and gas prices, peat is important as an alternative and native energy supply for this country. Some 37pc of our electricity is generated from gas, with 21pc coming from oil and just 9pc from peat. Another 2pc comes from hydro, with just 2pc generated from wind last year.

However, with the focus on spiralling gas and oil prices, many people may be missing the point that peat is the most expensive way to produce power in the country.

The question is: can we really afford to subsidise jobs in Midlands power stations to the extent of ?½m per job a year for a small amount of electricity? To put it another way: are peat stations burning cash when the wagons tip their turf loads into the stations.

Any change in the peat power set-up is likely to face significant political and union pressure.

But at the very least, more renewables like wood biomass and meat bonemeal should form a greater part of the input at the two ESB stations to increase their efficiency.

Calculations by Sustainable Energy Ireland estimate that greater use of biomass at West Offaly, Lough Ree and Edenderry could result in carbon savings alone of ?14m a year. Such a move would not have any employment implications for the plants.

The alternative is to continue burning a fossil fuel like peat, which is roasting us all economically and environmentally.