Recent Sunday Independent business features

 

Here are four recent Sunday Independent business features I wrote and contributed to:

http://www.independent.ie/business/irish/big-dogs-in-the-global-window-are-at-the-heart-of-dublins-silicon-docks-30220664.html

http://www.independent.ie/business/small-business/latest-news/from-trustev-to-boxfish-ten-irish-startups-raising-big-money-30180113.html

http://www.independent.ie/business/irish/building-blocks-for-data-centres-30013016.html

http://www.independent.ie/business/irish/what-are-irelands-hottest-startups-is-there-a-new-google-out-there-29928664.html

 

Wind Energy in Ireland: An Effort To Establish the True Cost

2953955-beautiful-green-meadow-with-wind-turbines-generating-electricity

* These are some key excepts from an article I wrote that was first published in the Irish Times Innovation magazine in March 2011

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The Irish Academy of Engineers, which claims no commercial or political affiliation, claims that the planned development of wind farms across the country to more than three times its current level of 1,500MW could cost more than €10 billion, with households and businesses being hit by higher bills.

The organisation says the country has enough wind and conventional power to meet its needs until 2020 so it may be wise to halt all planned development of wind farms for at least five years.

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“What is clear is that spark spreads –the margins that represent transmission costs and profit –are higher than in the UK or Europe.

The amount available, which may be pure profit, is up to four or five times that found in those markets. On average we calculate it is €32 perMWh (megawatt hour) here, whereas in the UK it is about €11 per MWh,” he (Ger Fulham, Managing Director of Kore Energy) claims.

Also affecting billpayers is the issue of capacity payments, paid to all generators of electricity simply for being available to supply electricity to the power s notice.

Fine Gael plans to reduce these “within two years” as part of its energy policy, but this will come too late for billpayers who have already paid out €1.5 billion in these payments over the past three years, according to Commission for Energy Regulation (CER) figures.

“We calculate that the capacity payment being paid to generators is €17 per MWh, three times the level of what is paid in the UK market. Ultimately it appears to be profit, with no tangible benefits,” says Fulham.

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Using market figures, a former industry source calculates that, because of this flaw in the market structure, the difference between the market price for electricity and the average price in 2008 was €870 million – all of which was unnecessarily passed on to billpaying businesses and households.

Between now and 2015, billpayers will also pay at least €1.4 billion in grid development and improvement costs that are necessary for the development of more wind farms, according to grid operator Eirgrid.

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In addition, there is the €500 million cost to billpayers of the East-West interconnector, also needed to facilitate more wind energy, it (Eirgrid) says.

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Another aspect of all this, perhaps indicating the true total cost of all of this wind energy, is that the ESB in 2008 announced plans to invest €11 billion in the grid and a further €11 billion in renewables and smart meters by 2020, although ESB sources say this strategy may be revised.

If this is the case then even allowing for what may have been spent to date, more than the €10 billion IAE figure may not have yet been spent. Yet there remains no indication of what this would mean for billpayers.

My addendum: Add up some of the numbers highlighted and you begin to get an idea.

The SEAI’s report (http://www.seai.ie/News_Events/Press_Releases/2014/Renewable-energy-has-saved-Ireland-over-%E2%82%AC1-billion-in-fossil-fuel-imports-in-past-five-years.html) is not an accurate reflection of the truth.

 

Renewables Future Left Blowing in the Wind

Mon, Apr 02, 2012

Ambitious plans to capitalise on renewable opportunities in Ireland appear to have stalled and it remains to be seen if the Government can get things back on track, writes JOHN REYNOLDS 

THE GOVERNMENT’S jobs action plan talks of building upon our Emerald Isle image and capitalising on opportunities, particularly in renewable energy, to “green” the economy. But has the dream faded?

“I was looking for very specific, measurable, timelined tasks . They’re not there. Without those, we don’t have a plan,” is the blunt observation of Joe O’Carroll, managing director of Maynooth and Cheshire-based Imperative Energy, a biomass systems company, on what he says is essentially a long “to-do” list that was announced last month by the Government.

While understandably focused on attempting to stabilise the economy, it remains to be seen whether Fine Gael and Labour can help the reinvigorate a sector that seems to have fallen into the doldrums.

Subsidy schemes for wind farms and biomass systems that were stalled somewhere between here and Brussels for more than a year have only recently been approved, for example.

But in the meantime, no one in business or Government has painted a detailed, meaningful picture of what the nation might look like if we capitalised on our strengths and addressed our weaknesses in this sector.

If we contrast our situation with Britain, the industry there is encouraged by a green investment bank with £3 billion of financial muscle behind it to boost investment and a fast-track system for planning permission for renewables.

In the US, the sector has received hundreds of millions of dollars in stimulus spending. Among the projects showcased at last month’s annual conference for the US department of energy’s advanced research projects division were batteries that could give electric cars a 500-mile range, fuel that could be extracted from tobacco leaves, a biofuel derived from bacteria, giant batteries to back up solar parks and wind farms and laser-powered drills that improve access to geothermal energy.

Although overshadowed by the $535 million of taxpayers’ money lost on solar firm Solyndra, those recent examples of the type of inventive research the US is funding beg the question of whether there is enough RD happening here.

The uncomfortable but likely answer is that there is not and that there will not be while our secondary and third-level education standards are falling.

We are still several years away from having the scale of wind, wave, tidal energy installations and other renewables needed to transform how Ireland generates electricity.

Marine energy is still being commercialised. Wind has received hundreds of millions of euro in subsidies to date, but it is not clear if more can be connected to our grid without prohibitively increasing our electricity bills even further.

The ESB and Bord Gáis, which have mainly been active in wind energy development, may be sold off, with as yet unknown effects.

The Spirit of Ireland project, now known as Natural Hydro Energy – an ambitious project that involves building man-made pumped storage reservoirs to provide carbon-free energy to back up wind farms – is at least two years away from starting, subject to planning permission, sources say. It could take another four years to build.

In the short term, our indebted State could provide a €300m annual stimulus to the domestic economy by supporting the biomass sector in one relatively simple way, O’Carroll says.

All that is needed is for the Government to alter how it procures heating fuel – currently imported gas and oil – for all public buildings in the State.

“We could offer fully financed solutions with no capital cost to the State. We’re asking for a chance to tender for a long-term renewable energy-heating solution using the technology that makes the most economic sense,” he says.

He has proposed this several times to the relevant ministers and Sustainable Energy Authority Ireland. “They listen, but then somewhere in the system, the idea gets bogged down in inertia, he adds.

Paul Carbery of Wicklow firm RES, an installer of small-scale renewable energy systems, whose clients are small- and medium- sized businesses, has turned to the UK, where these systems receive a small subsidy, to grow his business.

He shares this frustration. “The level of engagement and understanding from the Department of Energy seems very poor. I’m not sure civil servants take our industry and the support it needs, which can in turn create jobs, seriously.”

It is this inertia that has driven some of our other successful renewable energy companies into the arms of other, more proactive governments.

The Scottish government helped to finance the initial trials of Dublin and Louth-based tidal turbine maker Openhydro in 2007, for example.

Responding to our queries on plans for the sector, Minister for the Environment Phil Hogan said: “In our efforts to return to stronger economic growth, it is of the utmost importance that we embed rigorous sustainability requirements in economic and environmental terms. If we get our growth strategy wrong, we run the very real and significant risk of locking ourselves into an environmentally unsustainable future that will undermine our credibility on environmental grounds, and our competitive position in the medium and longer term.

“The deep cuts in emissions that will be required in the period to 2050 represent a huge challenge for Ireland, but an early and effective transition to a low-carbon path holds out the prospect of a real opportunity to demonstrate environmental credibility, and achieve competitive advantage in the emerging global green economy.”

The Minister for Energy and Natural Resources Pat Rabbitte did not respond to our questions.

Some industry executives would welcome the appointment of a minister who is accountable for meeting certain green-energy targets and supporting growth in the wider green economy.

Others argue that an existing umbrella organisation, Sustainable Energy Ireland, run by a proven management team whose salaries are linked to their results, would be preferable.

After a year in power, it would be unfair to say this Government has abandoned the green economy, but there is a perceivable sense of ambivalence about it, amongst many in the sector.

In the face of increasing home heating, petrol and electricity bills, aside from perhaps a few more wind turbines dotted around the countryside and the odd electric car charging point here and there, there is very little happening that is tangible to the wider public.

As a result, we are arguably a long way off making the economy very much greener, or generating any significant numbers of new jobs in this sector.

More worryingly for the future, aside from the wave and tidal technologies being developed here, there are few encouraging signs that an energy technology with the potential to be a global game-changer will emerge from Ireland in the near future.

IThey listen, but then somewhere in the system, the idea gets bogged down in inertia

Stars of the green economy where are they now?

IMPERATIVE ENERGY
 
Some 90 per cent of this bioenergy system developers business is now done in the UK – it recently secured a €70 million contract in Birmingham.

A flagship project in Claremorris, Co Mayo, and a smaller one in Arklow are awaiting planning permission after being delayed by the finalisation of the Refit3 subsidy scheme, which it hopes will boost its Irish business once again.

WAVEBOB
 
This Maynooth wave energy developer aims to have its first 100kw device installed in Scotland early next year, followed by two more in Portugal and the US over the next two years.

It shortly hopes to close a €10 million funding round and is part of the WestWave consortium, which aims to develop a wave farm off the west coast by 2016.

OPENHYDRO
 
Its main focus is currently on the world’s largest tidal array off the Brittany coast for French utility giant EDF. It is expected to be completed later this year and has been supported by the EU, the Brittany region and the French government.

Other arrays in Scotland, the west of Ireland, Canada and the Channel Islands are planned in the coming years.

THE SPIRIT OF IRELAND PROJECT
 
This multibillion-euro project is at least six years away from being completed. Pumped storage reservoirs in the west of Ireland, combined with onshore and offshore wind farms in the region, would provide hundreds of megawatts of carbon-free power for export to the UK.

MAINSTREAM RENEWABLE POWER
 
Although the wind energy firm of Eddie O’Connor (below) is focused on wind farm developments in Chile, South Africa, North America and the North Sea, it also has a renewed interest in Ireland and intends to float on the Hong Kong stock exchange some time next year.
Published in The Irish Times: http://www.irishtimes.com/newspaper/finance/2012/0402/1224314225873.html

Give me your tired, your poor…

Give the banks your tired, your poor, your unemployed masses yearning to be debt and mortgage-free,

The wretched toxic debts of Europe’s austerity-ridden shores,

Send the hopeless citizens and taxpayers, who have lost their democracies to the streets,

I lift my lamp beside the doors of the EU, the IMF and the ECB.

(with apologies to Emma Lazarus, who wrote much more eloquent lines in a sonnet, which is inscribed on a plaque in the Statue of Liberty – the one that says: “Give me your tired, your poor, your huddled masses yearning to breathe free)

If the ECB and Europe hang Ireland out to dry, Europe will have completely ceased to be a democracy.

Ireland should prepare for default and seek to adopt Sterling as our new currency asap.

Seanie and Britain’s Department of Business

WHAT will all the Sir Humphrey civil servant types at Britain’s Department of Business, Innovation and Skills make of it?

Disgraced former banker Sean Fitzpatrick is effectively a co-owner of the huge office block where they work in London.

A statement of affairs at his bankruptcy hearing earlier this week revealed that Seanie had an investment worth €1,584,595 in the property, whose address is 1-19 Victoria Street, SW1.

David Arnold and Deirdre Foley’s Dublin-based property investment and development firm D2 Private bought the building for £175m in early 2008 and it is understood that Fitzpatrick has a small stake in the property through an investment with the firm.

At the time, the annual rent of £9.05m for the 335,000sq ft office block – one of the largest single-let buildings in London’s West End – represented a yield of 4.75 per cent.

What will happen to Fitzpatrick’s share in the investment remains to be seen, but presumably British taxpayers – not to mention Chancellor George Osborne and his boss David Cameron – would be rather surprised to learn that he had one.

Although the lease runs until 2021, given the need to cut their government spending, perhaps they’ll make some choice comments at the next rent review in January 2011.

Are We Doing Enough To Foster New Irish Cleantech Businesses?

Published on Friday, May 28, 2010

CLEAN TECHNOLOGY: There are many Irish companies in the burgeoning green technology sector, but are we doing enough to foster them? asks JOHN REYNOLDS 

CLEAN TECHNOLOGY – or cleantech – isn’t just about wind farms, electric cars and solar panels.

In New Zealand, researchers have developed a spray for putting on cowpats that prevents the nitrogen they contain turning into the greenhouse gas nitrous oxide, which is 296 times more environmentally harmful than CO2. It qualifies as a cleantech and demonstrates that there is plenty of potential for innovation in all kinds of ways that might not have yet been imagined.

An emerging business sector with no standard definition, cleantech is a catch-all phrase encompassing a wide range of businesses and technologies that are at different stages of their evolution, all of which have different routes to market.

Specialist US research firm Clean Edge defines cleantech (or greentech) as: “An emerging sector that comprises a diverse range of products, services and processes that harnesses renewable materials and energy sources, dramatically reduces the use of natural resources, and cuts or eliminates pollution and toxic wastes. “These include such innovative and expanding technologies as solar photovoltaics, wind power, hybrid electric vehicles, fuel cells, biobased materials, and advanced water filtration.”

Many of these technologies also overlap with IT and software applications. Smart meters enabling household appliances to avail of cheap electricity rates will produce data that will need to be managed and analysed. Wind, marine and solar energy also requires specialist software to ensure it operates efficiently.

Cleantech’s sheer diversity and the size of the market means that it represents a huge opportunity for SMEs and start-ups. It is estimated that China’s cleantech sector alone will be worth €800 billion by 2013. It will take up to €1.2 trillion to green the UK economy between now and 2030 and another €1 trillion of investment in Europe’s power network. That is before you factor in other parts of the world and numerous other industries.

It remains to be seen how big a stake in this Ireland can lay claim to. Eddie O’Connor’s Airtricity may have created the largest number of millionaires in our corporate history when it was sold for €2.2 billion in 2008. But many doubt whether we can foster the sheer number of start-ups here that might result in a few more Airtricities.

We have a dozen or so very promising smaller cleantech firms and it is hoped that we’ll be very successful in wave and tidal energy. “But there are not enough coming through in this space and we don’t have enough entrepreneurship in Ireland,” says Bartley O’Connor, manager of PricewaterhouseCoopers’ sustainability practice. “It might take 1,000 start-ups to get a few big successes, perhaps only one.”

The Ecology Foundation’s founder Declan Murphy agrees. “Big energy and infrastructure are being tackled very well in Ireland when you look at what the ESB, Bord na Móna and Bord Gáis are doing. What we haven’t done is create the right environment for smaller projects and individuals to succeed.”

Government policy is that a number of cleantech clusters that are at various stages of their development will lead to a flurry of new products and services. Among them are the Shannon Energy Valley, Galway’s SmartBay project, the Irish Energy Research Centre at UCC, and competence centres in bioenergy, energy efficiency, manufacturing productivity and composite materials.

One of the few private-sector initiatives is in Mayo, where the Biospark – a futuristic green business park powered by renewable energy, and where the outputs of one business are the inputs of another – is being built.

But a closer look at the facts reveals we compare very poorly to a country such as Sweden, which is home to more than 4,000 cleantech companies. It was granted 1,245 patents last year, and 15 to 25 per cent of their patents are cleantech ones with commercial potential, according to Nutek, the Swedish development agency.

In stark contrast, last year Ireland was granted 145 patents – how many were cleantech isn’t specified. Just 114 cleantech firms exist here, six of which were high-potential startups, according to Enterprise Ireland figures, plus a further 60 with some activities in the sector.

One informal forum in which cleantech entrepreneurs have the opportunity to meet potential investors is the Cleantech Ireland network, which was formed last year.

Co-founded by serial entrepreneur Peter Daly, managing director of SmartBuilder Software – a developer of mobile software for the construction industry – there are a number of business angels and venture capitalists among its 50 core members and the 80 members who attend its meetings less regularly.

Someone who should be able to reveal to members the secrets of getting funding is committee member Tad Crowley, whose wind-farm operation software firm Servusnet recently raised €500,000 from Enterprise Ireland and a private investor.

“Our vision is that a young graduate might find an investor here who might be willing to put €25,000 to €50,000 behind a good idea. Or they might find team members. Often a young techie needs to find someone with a business brain to work with them who could be a co-founder, for example,” says Daly.

While the merits of networking, making informal pitches and learning from others’ experiences cannot be underestimated, a frequent criticism, particularly in the wake of the mixed success of the First Tuesday network that was spawned during the dotcom boom, is that they are just talking shops. Their informal nature means that it can be difficult to measure the investment results they generate.

A slightly more innovative organisation is CMyPitch, where entrepreneurs can pitch for investment both in person and in online videos. Despite having launched in Ireland last year, however, only three of the 38 reported “done deals” have involved Irish companies. The only cleantech firm that won an investment was UK-based.

At a more formal level, Enterprise Ireland’s annual investor forum in London saw 16 Irish cleantech firms and 15 software companies make formal pitches last year to more than 100 VCs from across the globe.

But there is only one Irish venture capital firm specialising in cleantech at the moment and that is the ESB’s Novus Modus. On a mathematical basis then, Enterprise Ireland’s annual event offers the best chance of finding an investor.

So despite Cleantech Ireland’s merits and its admirable efforts, quite simply we need more funding sources. “There’s an urgent need for imaginative thinking about how we fund innovative green business projects. We recently proposed an idea to Shell that would see them allocate €1 billion from the revenue streams from the Corrib Gas field over the next 15 years to such a fund,” says Ecology Foundation’s Declan Murphy.

“The Government would have to guarantee a return from this and then match it so you could have €2 billion in total. Shell would put something back into the country as well as the tax they’ll be paying and hopefully they’ll earn a reasonable return from it.”

Labour finance spokeswoman Joan Burton has also proposed to create a €2 billion strategic innovation bank, so evidently the thinking on this issue is moving in the right direction. But returning to the question of how we come up with more good cleantech ideas in the first place, for their part Murphy and his team at the Ecology Foundation are transforming the organisation into a project incubator.

It will train 100 new recruits with a wide range of skills who will then form small teams to work on 20 green business projects. With corporate backers providing some seed funding, the aim will be to generate cash flow as quickly as possible in the hope of taking the ventures to the next level.

Another sign of how Irish firms are mobilising in their own ways was when a group of Irish businesses, including Siemens Ireland, recently campaigned for the implementation of a green public-procurement policy. By giving them a greater share of €17 billion in annual State procurement spending, boosting green businesses here, the Government could support existing clean tech jobs and create new ones.

The need to instil a greater sense of urgency in these ways means we are likely to see more action like this, which will hopefully lead to more imaginative thinking about how we come up with new inventions, perhaps through cleantech innovation challenges and overseas innovation missions, for example.

Of course, only time will tell whether any of this involves an Irish cowpat-related innovation.

Casting Light On Another O’Leary Empire

Published on Sunday 4 April 2010. By John Reynolds

The high-flying Ryanair boss keeps quiet about his other financial interest — commercial property. We uncover the details of his vast portfolio

RYANAIR chief Michael O’Leary is seeking to rent out an office block he owns in the City of London, according to details that have recently emerged and thrown new light on his property interests.  

Located in the heart of the city’s insurance district EC3, 50 Mark Lane is a 27,000 sq ft office building that spans six upper floors plus a ground floor and lower ground floor, according to the agents.

With an annual rent of £37.50 (€42) per square foot for the upper floors and slightly less for the others, it would bring in about £875,000 a year.

Although currently unoccupied, renovation works on the property were due to be completed in March last year, and included the installation of a new air conditioning system, a new reception and basement showers.

His office may be empty for now, but having issued a report earlier this week saying that profits at the low-fares airline have soared for the year to the end of March, he shouldn’t lose too much sleep seeing that the value of his stake in the company is up by €16m.

Also in the news this week for the grovelling apology he had to make to transport minister Noel Dempsey about an untrue allegation he had made, Mullingar’s most famous resident keeps his cards close to his chest where his other wealth is concerned.

While it is known that he owns two houses beside each other on Raglan Road in Ballsbridge, Dublin — he paid €9.4m for one of these in 2006 and bought the one last year from corporate financier Angela Cavendish for up to €5.9m — very little is known about his other property investments.

We did, however, get a peek at how these are managed when he took out a number of national newspaper ads in September 2007 when, in anticipation of the departure of the previous one, he sought to hire a new assistant to manage his private investments.

The Sunday Independent has now unearthed some intriguing details about a number of British properties owned by the airline mogul. Unlike Stelios Haji-Ioannou, the founder of rival airline easyjet who has a division of his Easy group that rents out flexible office space around London, Mr O’Leary’s properties are anything but no-frills and appear to be let on longer leases to a much better class of tenant.

Next door to a massive modern office block that houses the world’s biggest dedicated business court, the Ryanair boss owns an office and retail block at Fetter Lane in EC4 in the English capital. tenants include Beachcroft, a law firm that has roots back as far as 1762 and which also has an office in Dublin; and The White Swan, an enticing city gastropub.

At one of London’s most sought-after office addresses, St James’s Street in SW1, a 13,565 sq ft-listed office block called Gam House is also believed to have been part of Mr O’Leary’s portfolio some years ago.

Close to Buckingham Palace, the Houses of Parliament and with the offices of global firms such as BP nearby, it was on the market in 2004 for £12.75m and commanded an annual rent of £675,000.

Elsewhere is Spectrum House in Edmund Street in Birmingham. Originally built in the 1970s, this eight-storey, 60,000 sq ft office block was refurbished in 2001 and would command an annual rent of about £1.5m, according to recent figures quoted in the Birmingham Post.

With law and accountancy firms based in neighbouring offices, it is currently let to HM Customs and Excise — better known as the taxman — according to the developer Frontier Estates.

The fifth property that has been part of Mr O’Leary’s portfolio is in Altrincham, a wealthy suburb of Manchester, not far from where many Manchester United players own stunning mansions.

Having paid £4.85m for it some years ago, the Ryanair chief is thought to have sold Aspect House, a 20,580 sq ft office building to a firm called Styles and Wood, which is in the property game itself — it specialises in managing and developing new stores for major retailers.

Offsetting my ‘08 and ‘09 carbon footprints

Having not offset my carbon emissions in the past few years. I’ve offset 260 tonnes of CO2 by protecting an acre of rainforest through Cool Earth and also helped to protect 1,000 trees through the Sky Rainforest Project.

My carbon footprint last year included a small number of flights to the UK and Ireland, and the same in 2008 with one additional return flight to Copenhagen.

The rest is made up of my share of home and office electricity and heating, plus other means of travel – mainly by taxi, bus and train – plus the carbon embedded in the goods and services I’ve purchased during that time.

Ireland’s average per capita emissions are about 16 tonnes per person, so I’m hoping that my offsetting covers this several times over.

While I am conscious that no offsetting project is perfect and their overall impact is perhaps very small, I believe they are among those that are the most worthy of my support.