The plant was constructed by the German company Siemens-Schuckert, although much of the design was done by Irish engineers and Ireland provided most of the labour force.

The 85 MW of generating plant in Ardnacrusha was adequate to meet the electricity demand of the entire country in the early years.

[1] Inspired by Nikola Tesla's 1896 project at Niagara Falls, "Frazer's Scheme" proposed a head-race canal ending at Doonass, and was sanctioned by the 1901 "Shannon Water and Electric Power Act".

This envisaged a seasonal scheme with a back-up steam turbine to generate electricity in the summer, but the overall cost was considered too great and the Act was shelved.

[2] At the end of 1923, the engineer Thomas McLaughlin approached the new Irish Free State's Minister for Industry and Commerce Patrick McGilligan with a proposal for a much more ambitious project.

McLaughlin had started working for Siemens-Schuckert, a large German engineering firm, in late 1922, and his scheme would exploit the full height difference between Lough Allen and the sea.

He drew on the analysis of 25 years of flow at the weir at Killaloe published by John Chaloner Smith, an engineer with the Commissioners of Public Works.

The scheme was published by Siemens in September 1924[3] and the government appointed a team of experts from Norway and Switzerland to check its viability.

[4] It caused considerable political controversy as the cost of £5.2m was a large part of the new state's entire budget in 1925 of £25m and interests in Dublin[who?]

But the experts supported the centralised solution which would require a distribution grid all over the country but recommended a two-stage implementation of the power generators.

[5][6] In 1925 Siemens started the works with Dr. McLaughlin as managing director and Professor Frank Sharman Rishworth, who took a leave of absence from University College Galway, as chief civil engineer.

[7] Siemens had to import a vast array of machinery from Bremen and Hamburg and built a 96 km narrow gauge railway to transport workers and supplies around the site, which included 76 steam locomotives.

[13][14] The London Financial Times was highly impressed with the result, commenting: Within three years the demand for electricity in Ireland had expanded so much that stage 2 was initiated.

The diverting of water to the power station had a disastrous effect on this, for two main reasons: Initially, there was no fish pass at Ardnacrusha to allow the salmon to migrate further up the river; this was later rectified.

Secondly, the reduction in water flow down the natural channel encouraged more fish to either migrate towards the head-race canal, or to the Mulkear river instead.

For the first few years after the opening of the scheme, water was diverted to the power station only as necessary for the electricity demand at the time, and thus the impact on the river was not initially severe.

In exceptionally wet periods, the flow of water out of Lough Derg is greater than 400 m3/s, and it is then necessary for the surplus to be released down the natural channel through Castleconnell.

As there is no lock at Parteen weir linking the natural channel to Lough Derg, it is no longer possible for any watercraft to enter, by water, this part of the Shannon.

By holding these lakes at a higher than natural level, by means of weirs, water accumulated during the wet winter months could be released during much drier periods to maintain supply to the power station.