A company whose plans for a liquefied natural gas (LNG) terminal in Shannon met opposition from Minister for Environment Eamon Ryan has won State contracts for two power plants on the same site as the controversial LNG project.
Shannon LNG, backed by US multinational New Fortress, plans to spend €650 million building the terminal and the power plants on the Shannon Estuary at Kilcolgan Lower, Ballylongford, Co Kerry.
The company has won a provisional agreement for two gas-fired generators capable of generating 353 mega watts (MW) of electricity in total from the State’s national grid operator EirGrid.
But Shannon LNG’s plans have exposed a Government split over energy policy, with Mr Ryan and the Green Party opposed to the plans, or any permanent liquefied gas terminals, while members of Fianna Fáil and Fine Gael, support them.
An energy security review commissioned by Mr Ryan and published last year excluded permanent LNG facilities but did consider temporary floating LNG plants.
Previously Mr Ryan, responsible for energy as Minister for Environment, Climate and Communications, said it would not be “appropriate” to proceed with any LNG terminals in the Republic, including the Shannon project. Opponents argue that LNG will increase the Republic’s dependence on fossil fuels, and use gas obtained through fracking, a controversial drilling method.
Globally LNG terminals mostly use gas drilled from conventional wells, while New Fortress has said in planning documents that the proposed development would not be “dependent on fracked gas”, adding that it was “confident that it can source gas from non-fracked sources in order to meet the energy demand and security of supply in Ireland”.*
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Supporters of the project say it will underpin energy security by providing an alternative source of natural gas to British and Norwegian imports.
Ireland relies on natural gas to generate more than half the electricity it uses. The Government, including Mr Ryan, endorsed plans to build more power plants that use the fuel to guarantee future energy security.
EirGrid has awarded Shannon LNG €140,000 per MW capacity payments – meant to offset building and running costs – over 10 years for the two gas-fired plants. The deal is worth a total of close to €50 million annually if the generators are built by 2027.
Shannon LNG has yet to get planning permission for the project, which could ultimately include power plants with the capacity to generate up to 600MW of electricity and batteries, seen as key to facilitating renewable energy development.
Environmentalists succeeded in getting the courts to block a previous proposal to build an LNG plant at Ballylongford, while New Fortress’s latest plans have also sparked protests.
EirGrid awarded the capacity payments in an auction meant to secure new electricity supplies from 2026 on. The grid company ran the auction jointly with its subsidiary, System Operator Northern Ireland, and the all-Ireland Single Electricity Market Operator.
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Companies pledging to build new plants with the capacity to generate 1,519MW of electricity were awarded. Other successful bidders included Airtricity owner SSE and State company ESB. Successful bidders in the auction will receive €698 million in capacity payments.
A spokeswoman for Mr Ryan said neither he nor the Department of Environment, Climate and Communications had a role in the capacity auction and receive no information on the participants.
*This article was amended on Tuesday, April 18th, 2023 to remove an incorrect reference to New Fortress having indicated that it would only use gas supplies drilled from conventional wells.
