Over 80 years ago Bord na Móna was established to develop Ireland’s peat resources for the economic benefit of the country. This peat was used to generate electricity for Irish towns and villages and create employment in economically underdeveloped regions at the time. Little changed in its business until the 1990s, where it continued to harvest peat for power generation across the midlands. However today, as little as 1% of Ireland’s bogs are now used for peat production by Bord na Móna and by 2030 it will not harvest any peat for energy production.

The company, which made operating profits of €33m last year, is undergoing a major transformation to prepare for this target, and expects that less than 30% of its profits will be peat based in three years’ time.

This change has been driven by EU legislation, which was introduced in 2009 with the aim of having 20% of the energy coming from renewables by 2020. A target which rises to 27% by 2030. Since its formation, Bord na Móna has contributed significantly to the regional economy in the midlands. In 2015, its peat business employed over 1,200 people and last year the peat business spent over €30m purchasing goods and services in the local economy.

Land transformation

Despite the challenges which include the expiry of the public service obligation for peat, the EU renewable energy targets and the deregulation of the electricity market, Bord na Móna wants to grow its power generation business. But it will not do it like in the past. It hopes to transform itself into a clean electricity producer by unlocking the potential of its land. As Ireland’s largest landowner, owning around 200,000 acres, it has plenty of scope.

With over 175,000 acres to transition out of harvesting peat for energy into a multitude of new uses, Bord na Móna will be managing the biggest land transformation in modern Irish history.

In the future, Bord na Móna will use Ireland’s natural resources and produce power from solar, biomass and wind. Forestry accounts for the remaining 5% of Bord na Móna lands and are leased to Coillte. Currently, over one fifth of its land is committed to future uses.

Carbon footprint

Last year, as part of reducing its carbon footprint the group restructured its fuels business, closed the Littleton briquette factory in Co Tipperary and also outlined plans to exit the coal business. This cost the business in the region of €39m last year.

Over the last 10 years the company has reduced its carbon footprint of the electricity it generates by 40%. It is targeting to reduce this by 65% by 2020 and 85% by 2025, helped by solar and wind. It has also been mixing peat with biomass.

Bord na Móna began co-firing with biomass at its Edenderry Power Station (Co Offaly) in 2008.

The company claims that the carbon emissions from a unit of electricity generated in Edenderry is now comparable with those from a gas powered power plant.

It sourced 350,000t of biomass in Ireland last year.It predicts its requirement for biomass will grow from 430,000 energy tonnes in 2018 to 1.5m energy tonnes by 2021.

Supplies of biomass come from growers of energy crops, sawmills and Coillte. But it wants to develop further domestic supplies of willow (which it says will require an energy crop incentive), pulpwood logs and woodchip.

One of the biggest challenges for Bord na Móna will be to remain profitable while it exits the business of peat extraction for energy production in 12 years’ time

Bord na Móna built Ireland’s first commercial wind farm in Bellacorick, Co Mayo in 1992. It also since developed wind farms at Mountlucas, Bruckana and Sliabh Bawn.

These have had the effect where more than 50% of the electricity generated by Bord na Móna is now classified as carbon neutral. It is also investing €180m in a joint venture windfarm with the ESB at Oweninny in North Mayo – a site that was formerly used for peat harvesting.

Some 12m of the iconic briquettes were sold last year. However, due to challenging market conditions driven by low home heating oil prices, grey market trading and carbon tax, sales of solid fuel have been hit in recent years.

This production will now be concentrated at its Derrinlough factory, near Birr in Co Offaly. Also, as a result of the company deciding to exit the coal business, plans to develop a smokeless coal plant in Foynes have now also been shelved. Bord na Móna also has plans to develop a renewable gas project near Portlaoise in Co Laois. The proposed development could treat up to 80,000t of biodegradable, organic materials each year to include commercial food waste, brown bin waste, animal slurries and purpose grown crops.

Anaerobic digestion would convert the organic materials into biogas, which would supply the existing gas network to provide heating for 5,500 homes. Its latest initiative is assessing the potential to develop solar farms across its lands.

Its waste and recovery business, AES is planning to become the country’s largest waste collector and processor.

Challenges

One of the biggest challenges for Bord na Móna will be to remain profitable while it exits the business of peat extraction for energy production in 12 years’ time. Its traditional businesses will need to underpin the development of its renewable power generation and waste recycling businesses. During the year the group paid a dividend of €2.3m to the State. Bord na Móna plays a key role in supporting 4,000 direct and indirect jobs across the midlands – many who are also involved in farming. Bord na Móna must identify new ways in which it can continue to fulfil its mandate in respect of the midlands by leveraging its key assets including its people and its land bank.

Financials

For the year ended 28 March 2018, turnover decreased 3% to €395m. Operating profit before exceptionals is strong at €33m, with earnings (EBITDA) decreasing €8m to €74m. The company reported net debt falling from €171m to €76m at year end as a result of the sale of its former headquarters on Baggot Street, which realised €40m along with the strong operating cashflow. Last year it invested €31m in sustainable business projects and €9m in research and development.