State companies Coillte and the ESB are in talks that might spark a €1 billion investment in wind farms, which could generate enough electricity to power more than 500,000 homes.
Coillte had been seeking a partner to work with it on building wind farms on land the forestry company owns after identifying a series of suitable locations.
Both it and the ESB confirmed on Monday they were discussing establishing a joint venture that could develop renewable energy plants with the ability to generate 1,000 megawatts of electricity by 2030, enough to power about half a million homes, according to Coillte.
Fergal Leamy, Coillte’s chief executive, said that the joint venture could invest about €1 billion over its lifetime. “It is roughly around €1 million a megawatt,” he said.
Coillte has begun work on 12 sites that it identified as having the best wind speeds and which were located suitable distances away from their local communities. Ultimately the joint venture could build 20 to 30 such generating plants.
Talks are due to conclude in May and if successful, ESB would acquire 50 per cent of the joint venture and provide services to the enterprise. The new business would use Coillte’s sites and wind farm development staff.
“Over the past few years we have put together a wind energy team and we felt the best way forward was to hive that off into a separate entity to focus on renewable energy development,” he said.
Initially, Coillte and the ESB could invest about €50 million each in the venture. Both will put up 30 per cent of the cost of each project between them and borrow 70 per cent.
Mr Leamy explained that the joint venture would build the farms, get them operating and sell them. It will then reinvest the cash raised to build further wind farms before selling them on.
He added that the company hoped to recruit buyers as it plans projects, which would in turn cut its borrowing costs, as the banks could loan money for these developments knowing they are getting a return.
Coillte said that having considered its options last year, it decided to begin talks with the ESB about creating a 50-50 partnership to develop renewable energy.
ESB and Coillte have discussed the plan with the Government: Minister for Agriculture Michael Creed in Coillte’s case and Minister for the Environment Richard Bruton in the ESB’s. They have also spoken to the European Commission to anticipate any state aid queries.
The pair have already collaborated on renewable energy projects, including wind farms in Castlepook, Co Cork, and Raheenleagh, Co Wicklow.
Coillte sold its interest in both those facilities along with two others to Greencoat for €136 million last year. The four wind farms in that deal had the capacity to generate 105 megawatts of electricity.