Ireland’s Electricity Prices Remain High Amid EU Declines

Electricity prices in Ireland have not fallen as significantly as in other European Union countries, according to the Economic and Social Research Institute (ESRI). The ESRI will present these findings to the Oireachtas committee, highlighting ongoing challenges for the Irish economy amid increasing global uncertainty.

The ESRI notes that while Irish energy prices have decreased since the peak of the energy crisis triggered by the war in Ukraine, consumer costs remain elevated. Specifically, the institute indicates that electricity prices in Ireland have not declined to the same extent as those in other EU nations. It states, “Prices for electricity in particular have not yet declined to the same extent as other EU countries. It is challenging to confidently identify the reasons for this, but prices are still largely driven by gas prices, and Ireland has not diversified away from using gas to generate electricity to the same extent as other EU countries.”

Currently, the average Irish household pays approximately 30% more for electricity than the average household in the EU, equating to around €347 annually. The ESRI emphasizes the necessity for substantial investments in the electricity grid to accommodate rising demand, diversify energy sources, and enhance network efficiency. Such investments, along with the expected increase in costs associated with subsidizing renewable energy, indicate a shift in the cost base of electricity from variable costs to fixed costs.

This shift is anticipated to be beneficial for consumers, as it would reduce their exposure to sudden price spikes. Nevertheless, the ESRI warns that this transition “may be regressive, depending on how these fixed costs are recovered by energy companies.” The institute advocates for the design of network tariffs that consider these contributions to overall costs.

Minister of State for Public Procurement, Open Government and eGovernment, O’Brien, has acknowledged the rising electricity costs and established an affordability task force within his department. This initiative aims to explore options for enhancing affordability for consumers. He explained that the pricing for Irish customers remains linked to wholesale gas prices at the European level.

O’Brien has raised concerns with the European Commission regarding the need to sever this link, emphasizing that meaningful change requires a medium-term effort. “More EU states like Ireland are now producing more renewable energy, yet the energy cost itself is still linked to the wholesale gas prices,” he stated. He reiterated that any modifications to this framework would need to be addressed collectively at the EU level, as individual nations cannot independently adjust these pricing structures.

As discussions continue on these critical issues, Irish consumers are left grappling with electricity costs that remain among the highest in Europe. The outcomes of the ESRI’s recommendations and the minister’s efforts may play a pivotal role in shaping the future of energy pricing in Ireland.