Leo Varadkar (Dublin West, Fine Gael)
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Question 1575: To ask the Minister for Communications, Energy and Natural Resources if any estimates have been made on the extent to which co-firing the three peat stations with 30% biomass will increase the cost of generating electricity at these plants; and if he will make a statement on the matter. [33164/10]

Eamon Ryan (Dublin South, Green Party)
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The objective of achieving 30% co-firing of biomass with peat in the 3 peat fired power stations by 2015, was set in the Energy Policy Framework 2007. Electricity generated at the 3 Peat fired power stations is covered under the Public Service Obligation which was introduced in 2001. This allows the companies involved, Bord na Móna and ESB, to claim back certain costs from the Public Service Obligation (PSO) fund. Because biomass displace peat, and the carbon costs associated with peat, the calculation of any potential costs associated with co-firing has to include any additional costs imposed by REFIT, less the savings related to reduced amounts of peat being used.

The cost effects of REFIT for co-firing is dependent on the average price of electricity in any given year, the amount of biomass that is actually consumed, the cost of purchasing carbon credits, and the breakdown of that feedstock between ordinary biomass and energy crops. However, were the reference price for electricity to be €80 MW/h in 2015, and all three peat stations to co-fire to 30% with a mix of 60:40 biomass to energy crops, the gross rate would be approximately €21m, per annum, against which would have to be set the reduced cost of consuming peat, particularly important given the associated carbon emissions (presumed to be €39/t as per the Department of Finance Guidelines). Even leaving aside the savings associated with the reduced cost of producing the peat, the carbon savings alone of 927,000 tonnes would result in a saving of €36.2m euro, giving a net benefit of over €15m to the PSO from co-firing.

At €100 MW/h, that gross effect would be an increase of €2.2m per annum, and the net price would involve a reduction in the PSO of €34m, largely due to the savings in Carbon emissions, which would remain the same as in the above example.