Future of energy bills for NI raised as plant faces axe

Ian Luney, President, AES UK & Ireland
Ian Luney, President, AES UK & Ireland

The man behind the running of Kilroot power plant has claimed energy bills for consumers across Northern Ireland could rise as a result of the plant’s pending closure.

Ian Luney, president of the firm AES UK & Ireland, was speaking after it was revealed that the company has earmarked the largely coal-fired Carrickfergus station for closure.

Dr Patrick Keatley, Ulster UNiversity energy market expert'Added by AK 26-01-18

Dr Patrick Keatley, Ulster UNiversity energy market expert'Added by AK 26-01-18

However an energy expert has cast doubt upon the likelihood of prices being hiked, whilst a utility regulator has said that energy customers could end up saving £50 million as a result of the shake-up of the Province’s energy system.

The axing of Kilroot would mean 120 full-time AES staff there would be out of work.

A company spokesperson said unless some solution is found, Kilroot looks set to shut in May.

Meanwhile at Ballylumford in Larne, another 30 full-time AES jobs also look set to be axed towards the end of the year.

In addition, the jobs of 120 full time contractors at both sites are also at risk.

There are three big power plants in Northern Ireland: Kilroot (running on coal with a little bit of oil power), Ballylumford (running on gas with some seldom-used oil power), and Coolkeeragh at the Foyle (gas only).

Mr Luney said the question is now how Northern Ireland’s full requirement for power will be met, between the point when Kilroot shuts and the north-south interconnector (designed to basically turn the whole island into a single electrical grid) opens in perhaps four years’ time.

Without Kilroot, Northern Ireland will have gas and wind to rely on, plus the Moyle interconnector to bring electricity from Great Britain via an undersea line.

“We think that capacity mix is going to be much more expensive in setting energy prices,” said Mr Luney.

“Bottom line is we’d like to see an assessment of the impact on wholesale prices. Our concern is they’re going to go up.”

Dr Patrick Keatley of Ulster University, an expert on the energy market, told the News Letter Mr Luney may be considering the fact that without Kilroot there would be “less of a mix... [if] there’s no coal you don’t have the same diversity of supply”.

As such, this could make electricity consumers more vulnerable to a big spike in the price of gas.

However, coal and oil (which Kilroot burns) account for only about a quarter of the Province’s electricity, he said, with gas taking up about half and wind the other quarter.

Therefore even if Kilroot was still running, consumers would see electricity prices rise alongside the gas prices anyway.

Ultimately, when it comes to the idea of higher bills as a consequence of losing Kilroot, he said: “I don’t see it as being a very realistic argument.”

In addition, he pointed out that the Kilroot closure announcement is linked to the fact it lost out on a new competitive island-wide bid for funding.

As well as the money which power plants make from selling their electricity, they also get funding via regulators based on the amount of capacity each one is capable of generating.

Historically, this has been a “blunt instrument” Dr Keatley said, with plants basically getting funding regardless of how efficient they were.

However a recent “auction”, at which plants had to bid against one another, saw Kilroot lose out (along with a one of the gas units at Ballylumford).

“It’s the first time Kilroot has been exposed to a really competitive auction process and it obviously didn’t make the grade,” said Dr Keatley.

“That’s the market – red in tooth and claw. The workers at Kilroot, I’ve every sympathy with them. But it’s AES – it’s a business. The electricity market, it’s not a charity.”

The UK government had committed to phasing out coal power by about 2025 anyway, so it was always “a question of when not if” Kilroot will shut, he said – even if the closure is sooner than anticipated.

Meanwhile, Stephen Kelly, chief executive of Manufacturing NI, said the fact Kilroot lost out in the auction just goes to show “the big old, clunky, dirty, inefficient power stations just couldn’t compete with the more modern, more flexible and better value generators”.

He added: “I’m not concerned at all in terms of the issue of security of supply. We are obviously concerned if anybody loses their job, but this is power at a price that wasn’t required.”

In addition Jenny Pyper, chief executive of Northern Ireland’s Utility Regulator, said: “We are concerned not only with security of supply but also that consumers only pay for generation that is actually required.

“Indeed, the auction outcome ensures that there will be savings of around £50m per annum for Northern Ireland electricity consumers.”

As for the staff at Kilroot, Mr Luney – an engineer by background who hails from the upper Shankill in Belfast – said: “The staff know my message. I met them all this morning, and the unions.

“The message is it’s hugely disappointing and devastating news. We’re working flat out to provide clarity and certainty in these difficult times as quickly as we can.”