I'm not applying celtic tiger costs to anything. I work in the construction of utilities and I know what costs are like right now and have a fair idea of where they're going to go.
Tender prices are already down about 20%. That's a seismic drop and there isn't a whole lot of scope to go lower. I would however expect static prices with little or no inflation for the next few years.
The civil construction market is at saturation point. Rather than seeing significant further drops in prices what is more likely is that contractors will start to go to the wall as they simply can't make a profit. Significant drops in labour costs have already been factored into prices and margins are practically non-existant. In addition there is already considerable existing competition in the Irish market from other EU contractors so it's not as if an influx our foreign companies to going to drive prices down further.
The other issue relating to construction costs is that the cost of materials is not something that is driven by the Irish market alone. The price we pay for fuel, steel, copper, etc. is driven by the international market. Commodity and fuel prices are not going to be depressed for long. Also, the production of cement is a huge producer of CO2 - about 800kg of CO2 per tonne of cement manufactured. The imposition of carbon taxes will drive these costs up also.
The idea that construction costs are going to continue to drop indefinitely is completely misguided.
Such as???
Again you're over simplifying this and missing the point. The PSH plants built in the past were for the purpose of addressing variation in demand. That is completely different from using them as storage facilities due to variation in supply. In the latter case the quantity of energy that can stored is of far greater important. The output power rating alone is irrelevant. The question is how long this output can be maintained for. If you take Turlough Hill as an example, in order to use this for large scale storage the artificial lake would have to be much larger. This would drive up the construction costs enormously and would also be hugely dependent on geotechnical considerations as the magnitude of excavation works rise. When the lake is filled the battery is full. When the lake is empty the battery is drained. For the application you're talking about the size of battery is critical. PSH plants designed for demand variation simply don't have the energy storage capacity for what you're talking about. Therefore it is not possible to simply scale the price against the MW rating.
As for cheap Polish labour a lot of them have gone home! Also, if this is a public works contract then the contractor is contractually bound to ensure that all workers on the site get paid the rates included in the relevant collective wage agreement, e.g. you pay workers whatever is included in the latest social partnership agreement.
No, that's not the point. The capital outlay must be justified on the basis that the power produced will be at a price the market is willing to pay. We've wasted enough capital in this country and projects must be justified on the basis of cost-benefit analysis, not wooly comparisons with unrelated issues.
It would simply never be built on the basis so it's not a relevant consideration.



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