The Aughinish Alumina refinery in Co Limerick has become the latest group to move into the electricity market, unveiling plans to build a £100 million plant in a joint venture which includes Bord Gais.

Aughinish's bill for electricity from the ESB is in excess of £10 million a year. Now, in a linkup with Bord Gais and Canadian Utilities (Atco), it will build a 250-megawatt combined heat and power plant at its existing Shannon estuary facility. Aughinish needs about 40 megawatts of electricity a year and will be free to sell the remainder, following partial liberalisation of the market from next month.

An Aughinish spokesman said Bord Gais would market the power plant and would supply the gas to power the plant. He said a feasibility study on the project had begun and it was hoped it would be built and operational by 2002. During construction, it will employ 200 people.

Next month, 28 per cent of the electricity market will be deregulated, leaving the top 350 users of electricity in the Republic free to source electricity wherever they want and to become sellers of electricity if they wish.

About 10 consortiums have signalled that they will build new power plants. Industry sources doubt all these will come to fruition, but Aughinish, which employs 450 people, has long been tipped as a likely candidate to source its power requirements elsewhere.

The Aughinish spokesman said the new electricity plant would have an efficiency rate of about 80 per cent, compared to the norm of 5060 per cent. He said the use of natural gas instead of heavy fuel oils to generate power and steam would help the plant reduce greenhouse gas emissions by 1 per cent. It would make a significant contribution to the Republic's Kyoto commitments, he added.

In a statement last night, Bord Gais said it was pleased to be a part of the project. It said the plant was a key step in the development of its total energy strategy "and will enhance BG's position as a significant player in the overall energy market".