Airtricity may very well be unique in the world: The Dublin, Republic of Ireland based operation with activities in both parts of Ireland and the mainland UK as well in Texas, USA – and soon also in Ontario, Canada – is a fully integrated renewable utility focussing on wind power and to a lesser extent landfill gas and hydropower.
Supply follows generation and where we go depends on the market,” says Mark Ennis, the affable chief executive officer of Airtricity’s supply business. “We identify sites, develop, construct and operate wind farms, and we trade and retail electricity,” Ennis explains, pointing out that Airtricity, which was established in 1999, currently owns some 200 MW of wind generation, increasing to around 600 MW by the end of quarter 1 2007 and then more than doubling again by the following year. This is supplemented with electricity purchased from other suppliers, which is then supplied directly to customers or through power purchase agreements to other retailers.
Ennis, who joined Airtricity in 2002, with what he admits was no knowledge of the power industry but considerable business experience – he was formerly CEO of a packaging company, Boxmore International – says that the British market, which is a competitive open market, is a good market to operate in. “We can offer added value in a power purchase agreement by offering to take the balancing risk” – customers there including Centrica and E.ON. But it is the company’s native Ireland that is its largest market – currently at least, with more than 45,000 direct, mainly small business, customers across both Northern Ireland and the Republic.
“We’ve done good groundwork to promote green power and in our experience about 30% of customers approach us unprompted, while about 60% are prompted,” says Ennis. “And then there are the 10% who switch, no matter what the price of power!” For the Irish operations while Airtricity does its own billing, the incumbents in the respective regions do the metering and this, Ennis says, is proving an issue, as the meters are not read as frequently as the company would like – some customers are read as often as quarterly but there are others who have not had their meters read in two years. “This results in a lot of estimated reads and is in fact one of our biggest challenges, with about half of all the billing queries related to estimated reads.”
As a result Airtricity has launched an initiative to encourage customers to do their own reads and submit them by email – and about 10% of customers so far supply their own reads, Ennis says, adding that under-reading has not been found to be an issue and that customers are simply happy to know they are being billed on a meter read. However the situation might change when the two Irish electricity markets are combined into a single ‘all-Ireland’ market in November 2007 – a move that Airtricity supports, Ennis says, “provided that there is enforcement of market rules to make the market more transparent.”
Ennis also notes that all bills to customers indicate the amount of carbon dioxide that has been saved through their use of green power – and in a way that is readily understandable, in terms of the number of cars that would have to come off the road to effect the same saving.
The Texas market represents Airtricity’s first move outside the UK and its first operation there – a 125 MW wind farm at Forest Creek, close to Sterling City – is currently under construction.
“The Texas market is very competitive and there are a number of potential large commercial and industrial customers, who buy large blocks of power and place a high value on green power,” says Ennis. “Already we have more than 200 MW of power purchase agreements in place.” Indeed the company cannot build its new wind farms fast enough, because of what amounts to a worldwide shortage of wind turbines. Thus Ennis notes, Airtricity has already secured 750 MW of turbines and has committed a further US$600 million for another 500 MW of turbines by 2008-9.
“This will allow us to ramp up very quickly,” he says, adding that Airtricity has a development pipeline of over 7,000 MW currently in planning in the US, including sites at Munnsville and in Steuben County in New York among others. Airtricity’s North American operations are headed by former FERC chairman Pat Wood from headquarters in Chicago, and a CEO of supply is currently being sought. Most recently Airtricity has also announced that it is to move into the Canadian market, through its acquisition of the privately held wind farm developer Gale Force Energy. “As a business Airtricity has increased in value by almost 100-fold since its founding and this can only continue,” says Ennis. “Security of supply is a key issue and there is a high conciousness of renewables and sustainable energy.”