Bord Gais becomes Ireland's second largest wind player

Ireland’s state-run energy firm Bord Gáis has agreed to buy developer SWS’s wind portfolio for more than €500m ($740m), and intends to invest another €700m building out its project pipeline over the next five years.

SWS – owned by a group of investors including Ion Equity and the troubled Anglo Irish Bank – is Ireland’s second largest wind farm operator, with 179 megawatts (MW) of installed capacity. It has another 460MW in the development pipeline, half of which is teed up for construction within the next two years.

The deal – Ireland’s third-largest corporate acquisition in 2009 – follows months of competitive bidding and backroom negotiations.

For decades Bord Gáis has focused on supplying and distributing natural gas throughout Ireland. Upon entering the residential electricity market in 2008, however, it drew up plans to invest €1.2bn in wind projects to broaden its revenue stream – all of which will be spent on SWS’s existing assets and pipeline.

Bord Gáis is also building a 450MW gas-fired power plant near Cork, and a number of smaller gas-fired generators spread across the country to be used to back up its wind farms. When all its current projects are completed the company will have more than 1 gigawatt (GW) of generation capacity – or 20% of Ireland’s total.

Chairwoman Rose Hynes says the purchase of SWS is a critical step in the company’s “dual-fuel, all-island” strategy. Bord Gáis currently has €800m on its balance sheet, which executives insist is enough to fund their expansion plans.

Irish Energy Minister Eamon Ryan gave his initial approval to the deal, calling it a “wise investment in the growing green economy”. But Bord Gáis, whose largest shareholder is the Irish government, must still win the permission of Finance Minister Brian Lenihan before it can finalise the acquisition.

Ireland’s 119 existing wind farms have an installed generation capacity of more than 1.5GW. By 2020 the country will have an estimated 6.3GW in operation, according to the Irish Wind Energy Association.

Ireland, which has a peak-load electrical demand of 5GW, aims to become a net exporter of green electricity over the next several decades on the back of its wealth of wind resources.

To that end, the Electricity Supply Board – which Bord Gais beat out to buy SWS’s wind assets – is currently building a 256km electrical interconnector with Wales, using a €500m loan package provided by the European Investment Bank.