Competition Authority should hold ESB unions accountable for monopoly blackmail

probe

The ESB trades union should be open to the same penalties under competition law as companies and others, where they engage in anti-competitive tactics designed to preserve monopolies and frustrate competition.

A free and open grid is the key element, if green energy is to flourish in Ireland. Every household and business electricity consumer who meets minimum safety and engineering standards should be free to sell their own surplus electricity production back into the public network. This would make individual investments in small scale green energy production units more financially attractive, and this in turn would help make the network more reliable.

Similarly, the Irish grid needs to have multiple, high capacity connections (at least 3 to 5 GW) with the mainland European grid to enable surplus green energy produced in Ireland to be exported and low carbon, low cost (ie nuclear) energy to be imported in periods when climatic conditions reduce the output of green energy systems in Ireland.

Taking wind energy alone, if the national installed base of onshore and offshore wind generation capacity was increased by a factor of ten fold, the peak output would be around 6.5 GW – well in excess of the current daily winter time national peak demand of say 5 GW. (This would be no big deal because there are very few windmills in the country as it stands and lots of windy coastline around the country to install offshore units). Add to this the wave and tidal potential and it is obvious that there will be huge surplus peaks of green energy production to be exported or stored when the system is finally unblocked.

Every 1 GW in capacity of interconnector cable carries €50,000 worth of electricity at 5c per kW (wholesale price) per hour – which is €436.8 million per annum. 4 GW of interconnector = €1.7 billion in wholesale electricity revenue capacity. The ESB monopoly would retail this electricity with a three fold markup on top! It would cost about €700 million to install each 1GW connector to France. The marginal cost of nuclear production in the EdF system is about 2c per kW – which they would probably sell in bulk for under 5c per kW at a guess.

While the proposed detachment of the high voltage grid from the ESB is a start, it is an alarmingly modest step in terms of the package of measures that will be required to provide abundant, relatively low cost, relatively carbon free energy to Ireland (and the rest of Europe) over the coming decades.

Ireland has the opportunity to become a leader in this renewable energy marketplace. The ESB grid must be fully opened up, in the same way as the rapidly deteriorating eircom network (local loops and backhaul) must be fully unbundled to reap the benefits of competition and diversity and provide security of supply.

There is much to gain from opening up the full ESB network – end to end and extending it on a European basis. Gains for the electricity user, electricity producers, the ESB/Eirgrid (whose home market gets several hundred million new potential consumers), the environment, and most importantly the long term continuity of supply it will provide for today’s and tomorrow’s electricity users.

.probe

SeanW

The above post is pretty much on target.

I too think an independent grid is a very good start. But with Brendan Ogle involved it's not going to be pretty, we can expect some blackouts before this storm is over. I am following things in railway development and I know that Brendan Ogle's ILDA strike helped to change the dynmaic of Irish Railways forever. The two main effects were: 1: It helped to kill railfreight.
2: The government formed the RPA to take some responsibilities off CIE, most notably the Luas project. Some believe this was a direct response to the industrial relations situation within Irish Rail.

I always feared when that nutter left transport to join ESB that there would eventually be trouble. Let's hope the upcoming blackouts cause the government to double its efforts to make Eirgrid fully responsible and independent.

I too would like to see more wind farms being built and net metering to allow individuals with solar panels and home turbines to jump in and contribute to the grid.

Thing is though, we would also need a interconnector to Britain for export of wind energy. If EdF really is making nuclear for 2c per kw/h, you hardly think France is going to be too keen to import renewable energy from Ireland? I seriously doubt it.

The UK is another story. Their nuclear system is a big mess, with large scale reliance on antiquated MAGNOX reactors all of which will have to be decomissioned soon, and the AGRs which aren't far behind. Britain only has one modern nuclear reactor, the PWR at Sizewell B, and that was held up in the courts for 6 years. The pessimist in me also fears that the enviro-extremists will manage to fully derail Blair's plans for a nuclear renewal, which only ever called for the replacement of old plants and a slight increase in nuclear capacity to keep nuclear in the mix, as opposed to an all-out effort like France. In the normal course, this would result in even more environmentally disasterous coal fired generation which I would imagine future British governenments would like to avoid.

Either way it makes Britain a nice market to sell surplus green energy to if we can get our act together.

silverharp

SeanW wrote:

The pessimist in me also fears that the enviro-extremists will manage to fully derail Blair's plans for a nuclear renewal, which only ever called for the replacement of old plants and a slight increase in nuclear capacity to keep nuclear in the mix, as opposed to an all-out effort like France. In the normal course, this would result in even more environmentally disasterous coal fired generation which I would imagine future British governenments would like to avoid.

Either way it makes Britain a nice market to sell surplus green energy to if we can get our act together.

I think there will be a wake up call soon enough, the North Sea is going into decline much quicker then they expected and I wouldn't like Putin to be deciding how much gas your country is going to get. However looking at the US, it is even worse, it is difficult to get off shore windfarms built due to envrionmental law suits, fiddling while rome burns comes to mind

magicbastarder

i hardly think holding a union responsible for knock-on effects of union actions in the manner described about would be possible of useful. the union's very role is to look after the employee, with the effect on the company a moot point, except as regards to that effect's effect on long term prospects of the employees.

that's not to say that i would support all unions in their demands; but i think any such move could be the death of unions in ireland, and that would be far more damaging than the current situation.

probe

SeanW wrote:

If EdF really is making nuclear for 2c per kw/h, you hardly think France is going to be too keen to import renewable energy from Ireland?

Just because Ireland connects with the French grid doesn’t mean that Irish energy exports have to be sold in France! The French grid has heavy duty connections to Spain, Italy, Switzerland, Germany, and Belgium. You dump 10 GW/h into the French grid somewhere around Roscoff and an electricity supplier in Spain, Italy etc can take it out of the French grid via their frontier connections. It operates on the same principle as when you sign up for Airtricity or some alternative supplier that uses Eirgrid. Airtricity’s electricity is “mixed up” with the ESB’s nasty black over-priced electricity and the Airtricity supply comes into your premises over the legacy ESB connection.

As pressure to reduce CO2 + CO2 taxes, and gas shortages/higher prices hit Europe in general, there will be an increasing market for Irish green energy from all sources. In the longer term nuclear has its limitations in terms of raw material supply and political acceptability of new plant for generating, reprocessing and storage of waste.

Britain is a one way street in electric energy strategy terms – they will have an insatiable demand to import Irish electricity as their old plant has to be shut down and their gas plant faces shortages of raw material supply over the next 10 to 15 years and beyond. GB can’t be relied on as a backup for Irish green energy systems, when the supply crunch comes. This is why it is essential to have substantial direct connectivity to mainland Europe for two way trade, which is a vital part of the green equation for Ireland. We will have to use the Continental grid as a "battery" to "store" green energy from a virtual perspective.

After the next decade, gas supplies – even from Russia will be tapering off and supply/high price problems will result.


.probe

lostexpectation

one hopes the unions will save us from enron style anti-competitiveness

probe

lostexpectation wrote:

one hopes the unions will save us from enron style anti-competitiveness

Enron was financial engineering fraud. And lots of other types of fraud.

ESB union members are very well paid (eg RTE recently reported that ESB generation plant workers are receiving in excess of €100,000 pa at certain locations).

These highly paid people are engaged keeping obsolete, energy wasteful plant working, while consumers are paying 16.2873c per kW for the high CO2 electricity they produce. Some of which money should be invested in modernising plant and green energy generally – rather than wasting it on unjustifiable salaries for ESB staff, flexing their monopoly muscle. Green energy producers are being locked out of the market. The French market is dominated by an ESB equivalent (EdF) – but at least it is reasonably regulated.

EdF charge 10.74c per kW in mainland France. France is the last communist country in Europe in many respects, and EdF have huge union power, but I can assure you that no generation room staff have anything like €100k per annum on EdF’s payroll.

EdF is even cheaper in remoter parts of the France, places far smaller than Ireland. (10.34c per kW in Guyana, and 9,87c per kW on the island of Réunion (a map link for anyone unfamiliar with the location of one of France’s more remote départments http://local.live.com/default.aspx?v=2&cp=-21.202337~54.356232&style=r&lvl=7&tilt=-90&dir=0&alt=-1000)

16.3c - v - 10.7c per KW. One has to ask oneself who is the “Enron” in the Irish electricity market?

What is going to be done about it, and when?

.probe

lostexpectation

probe wrote:

Enron was financial engineering fraud. And lots of other types of fraud.

ESB union members are very well paid (eg RTE recently reported that ESB generation plant workers are receiving in excess of €100,000 pa at certain locations).

These highly paid people are engaged keeping obsolete, energy wasteful plant working, while consumers are paying 16.2873c per kW for the high CO2 electricity they produce. Some of which money should be invested in modernising plant and green energy generally – rather than wasting it on unjustifiable salaries for ESB staff, flexing their monopoly muscle. Green energy producers are being locked out of the market. The French market is dominated by an ESB equivalent (EdF) – but at least it is reasonably regulated.

EdF charge 10.74c per kW in mainland France. France is the last communist country in Europe in many respects, and EdF have huge union power, but I can assure you that no generation room staff have anything like €100k per annum on EdF’s payroll.

ow long are they working there ?

EdF is even cheaper in remoter parts of the France, places far smaller than Ireland. (10.34c per kW in Guyana, and 9,87c per kW on the island of Réunion (a map link for anyone unfamiliar with the location of one of France’s more remote départments http://local.live.com/default.aspx?v=2&cp=-21.202337~54.356232&style=r&lvl=7&tilt=-90&dir=0&alt=-1000)

16.3c - v - 10.7c per KW. One has to ask oneself who is the “Enron” in the Irish electricity market?

What is going to be done about it, and when?

.probe

you want split it up privatised it and turn into an eircom-alike, not me

SeanW

lostexpectation wrote:

one hopes the unions will save us from enron style anti-competitiveness

Which would be unanimous IF THAT WAS WHAT WAS BEING PROPOSED.

The plan is very simply to split the ESB into a generating company, and to give full responsibility for the transmission system to Eirgrid.

Eirgrid is owned by the state and operated on a not-for-profit basis.

The only Enron-itis here is with the people who want to preserve the ESB monopoly over everything.

Brendan Ogle has a habit of leaving a trail of destruction behind him wherever he goes. He must be stopped. And it is essential that Eirgrid is made fully independent. Less than a year ago, Eirgrid was only a transitionary brandname for the former ESBNG, ESB National Grid. Now they've achieved s certain level of independence, at least on paper, it's time to finish the job.

Solair

split up and sold would be nothing like how eircom plc happened. Telecom Eireann was sold as a single unit, that's where all the competition problems in that sector stem from!

ESB being split is very necessary.

Lennoxschips

I think that switching to renewable energy is not something that the private sector is jumping to do, and it should be government led. When the ESB is owned by the government, this can still be achieved. Of course, there's a lot that needs to be sorted out in the ESB, but I don't think it should be privatised or split up. That will only make things worse and place Ireland's electricity generation in the hands of foreign multinationals and their shareholders, who, let's face it, couldn't care less about Irish customers.

The pro-nuclear people here who are constantly holding up France as an example of everything that is good in the world will note that their electricity supply is almost entirely state run.

SeanW

Lennoxschips wrote:

The pro-nuclear people here who are constantly holding up France as an example of everything that is good in the world will note that their electricity supply is almost entirely state run.

As indeed I do, however, the proposal here AFAIK does not contain any privatisation, it's just separating the operations of the ESB and Eirgrid so that competition can come in on a level, transparent playing field.

probe

Lennoxschips wrote:

The pro-nuclear people here who are constantly holding up France as an example of everything that is good in the world will note that their electricity supply is almost entirely state run.

I don’t know who you are referring to – but it can’t be probe! For the record, I am not “pro-nuclear”.

Installing nuclear generation capacity in Ireland would make no sense for many reasons – small size of the market, short, medium and long term problems with waste disposal, lack of expertise, public health and safety risks, raw material supply issues, etc. Not to mention the political and planning issues. Conventional nuclear is a short term solution with a slightly longer shelf life than natural gas and very low CO2.

We are going through a hiatus / transition period in energy generation, moving from coal, oil and gas to 100% renewable. Virtually all of the technology to produce zillions of GW of green electricity is now well established and commercially viable. The barrier to rolling this out is the State. It is the State in the form of the ESB/Eirgrid that blocks/limits access to grid connectivity nationally – and makes almost zero provision for international connectivity.

Denmark is almost an island, similar population to IRL, and has almost 4GW of international grid connectivity to Norway, Sweden and Germany. The State (in the form of Irish Rail) has made no provision to electrify the rail network (aside from DART and LUAS / 1.38% of the rail network (as has taken place everywhere else in Europe) and has allowed the rail freight industry to be virtually shut down. Meanwhile railfreight is being continuously expanded in intelligently run countries such as Switzerland – where trucks and containers are being forced to use rail.

Between wind, wave, tidal, solar, and biomass Ireland has more than enough green energy raw material within its land and sea boundaries to meet its energy needs as well as producing a surplus for export, even with an increased population, forever. The key issues are storage (ie the battery) and the need for an open grid so that everyone who wants to can sell surplus and/or stored electricity back into the grid as well as buy it.

To use a computer analogy, at the moment most electricity is produced in “mainframe” computers of the 1950s to 1980s era – ie largish power stations mainly owned by the ESB. Computing has moved on to PCs and networks and the same trend is taking place in power generation.

There are three reasons why probe is strongly advocating high capacity grid connections with continental Europe –

1) it is an efficient means of dumping the huge surplus of electricity that Ireland could produce at peak green energy production times – even with a small increase in the installed base of wind generation etc.

2) Grid connectivity provides a means of buying cheap French low CO2 electricity in times when green energy output is low due to climatic reasons. The alternative is wasting money on greenhouse gas fines under Kyoto - might as well spend it on a tangible lasting asset that actually deals with the problem.

3) When nuclear fusion becomes a viable source of power, France is likely to be the first country to roll it out due to the presence of €10 billion experimental fusion reactor in Cadarache in the PACA region.

Also for the record Electricité de France (EdF) is a public company, listed on several European stock markets (ISIN: FR0010242511). Not a government department with a brand name like the ESB and Eirgrid.

Notwithstanding the above, probe has never suggested that either Eirgrid or ESB be “privatised”.

.probe

Keeks

probe wrote:

The barrier to rolling this out is the State. It is the State in the form of the ESB/Eirgrid that blocks/limits access to grid connectivity nationally – and makes almost zero provision for international connectivity.

I think you will find that this is not entirely true. I dont know of any project being held up because the ESB blocked the connection to the grid. The ESB are obliged to connect any commercial generating supply to the grid. The only way it would be blocked is if it didn't satisfy the ESBs/Eirgrids set of "grid codes" which basically deal with monitoring (SCADA), dealing with active and reactive power, etc.

Most of the grid problems are held up at local level with NIMBYism. People dont want new transmission lines, lines necessary for the upgrade of the National grid to take all the power from green sources.

SeanW

probe wrote:

I don’t know who you are referring to – but it can’t be probe! For the record, I am not “pro-nuclear”.

No, I'm pretty sure he was referring to me ... I've been (one of, if not the) biggest pro-nuke poster on all of boards.ie in recent months.

From whatever your perspective on environmentally responsible energy, separating the EirGrid operations from the ESB generation to provide transparent access for 3rd parties because all the potential sources of clean energy come from private or foreign sources, by this I mean renewables from Airtricity, Nuclear from EdF or whatever else you're after, it will have to come in from non-ESB sources.

The ESB has among the filthiest plant portfolios of any major energy supplier for 3 hey reasons:
1: They're prevented from pursuing nuclear electricity.
2: They have a statutory responsibility to meet Irelands energy demands regardless of factors such as wind speed, rainfall levels, tidal conditions, cloud cover or the other factors that influence current renewable generation.
3: They are bound by Public Service Obligations (sic) to buy and generate energy from Peat Fired power plants (Read: billpayer-subsidised bog cutting).

Therefore, getting more CO2-limited energy into the grid from EITHER renewable or imported nuclear sources depends on the ESB and EirGrid being separated.

Lennoxschips

Also for the record Electricité de France (EdF) is a public company, listed on several European stock markets (ISIN: FR0010242511).

that's only a recent development (last couple of years i think) forced upon france by the european commission.