The Minister for Marine and Natural Resources Noel Dempsey has confirmed he has given the go-ahead to the ESB to build a new €300m power station in Aghada, Co Cork.
However there are conditions attached which may cause difficulties for the state-owned power producer.
Under the Minister's stipulations, the output from the new Aghada facility must be sold to rival suppliers other than the ESB such as Airtricity and Viridian, in a move to stimulate competition in the sector.
Also, the plant will have to be ring-fenced as a separate company within the ESB.
The Minister said the conditions will help address two significant elements of energy policy: security of supply and competitiveness in the single electricity market which will lead to reduced prices for the consumer.
He said the new plant in Aghada is needed by winter 2009-2010 in order to provide adequacy energy for the economy and consumers.
Minister Dempsey said he looked forward to ESB's confirmation that they will accept these conditions so the building of the new unit can get underway without delay.
Ireland 's use of electricity is surging and the country needs new power plants. The Government has been trying to promote competition within the sector, which is dominated by the ESB.
Energy group Viridian said it was disappointing that there was not an open and transparent competition for the replacement of the Aghada power plant.
'Allowing ESB to build and control a large capacity baseload plant while only marginal sites are being made available to independent operators sends a very negative signal to potential new investors', it said.
Viridian Group owns Energia, Huntstown Power, Northern Ireland Electricity and Powerteam Electrical Services.
