O'Donoghue said that the ESB's employee share ownership trust (ESOT) may force a sale at full-price and warned the company's rivals that they shouldn't expect a "free lunch" under its agreement with the Commission for Energy Regulation (CER) to decommission four power stations by 2010.

"We want full commercial value and we will have them valued ourselves so as to have a position to judge what the offers are, " he said. This situation could cause difficulties for rival companies wishing to redevelop the site of ESB's three thermal units at Poolbeg in Dublin's Docklands, which could be worth over 500m.

He also indicated that he did not regard renewable energy as a core business for the ESB, despite the government's policy to promote green energy.

The ESB has said that O'Donoghue, who made his remarks at the company's annual report launch last Wednesday, was speaking in a personal capacity and his views were not company policy.

When asked whether the company's ability to raise finance for future projects would be reduced after the grid transfer, O'Donoghue replied: "I suppose, say, the grid is worth 1.3bn, now I don't think you can transfer it without paying 1.3bn."

He indicated that the company would be seeking the full market rate for the grid.

"There's no company that has the legal authority to give away a gift. Now unless the government passes an act or something which could make it legal."

However, O'Donoghue said he believed the ESOT would probably "cause the government a bit of a problem". They may say 'look we don't want to sell this so compensation is not enough'. So how that one will play out, I just don't know."

In terms of the ESB's commitment to renewables, O'Donoghue said that the company had to strike a balance that would "on one hand have us centrally involved in developing renewables but without taking away our focus on our core business" on the other.

"I don't want people like [ESB chief executive] Padraig McManus be dragged out to look at some things that might never happen. And yet we all want to participate in it because it is government policy."

When asked about O'Donoghue's remarks, the minister for energy Eamon Ryan said: "I think sometimes it is better to hold your counsel and work things out in an ordered fashion. How the transfer will be managed is something we'll have to sit down with the ESB and Eirgrid and work out."

Ryan declined to comment on whether the government would pay the ESB full market value for the grid, stating that he didn't want to prejudice the transfer process.

He said, however, that fears that the ESB's finances would be worsened by transfer were unjustified.

"My aim is to establish the ESB as the leading green power utility company in the world. To make a company successful, it needs to have the right funding mechanism in place and no government will leave the ESB without that."

When asked whether the ESB would charge its rivals full market value for its decommissioned sites, Ryan said that "nothing is not going to be discussed and nothing has been decided" between the ESB and CER on the issue.

A spokesman for Viridian, one of the ESB's main rivals in power generation, said that the implications of O'Donoghue's comments depended on his definition of commercial value.

"If he is speaking in terms of its market value as an electricity site, there's no reason why it should put people off, " he said.

He added, however, that if the ESB based its market values on the alternative development uses of sites such as Poolbeg, such as building apartments, they would be too high for independent producers.