Image Why are energy prices increasing?
Image Daragh Cassidy
Head Writer

All energy suppliers in Ireland have increased their prices significantly over the past few months, and most more than once. But why?

It hasn’t been a great few months for energy customers in Ireland. 

All of the country's energy suppliers have announced big increases in their gas and electricity prices over the past few months and more price hikes look to be on the way.

Here's a look at some of the recent price hikes from the main suppliers.

Spring energy price increases

Supplier

Electricity increase 

Gas increase

Effective date 

SSE Airtricity

+6.2%

+4.5%

1st April 

Pinergy

+4.2%

N/A

1st April

Energia

+8.6%

+5.7%

5th April 

Panda Power 

+7.5%

No change

 

8th April

Flogas

+8.5%

+6.5%

12th April

Bord Gáis Energy

+8.0%

No change 

12th April 

Iberdrola

+6.3%

+4.9%

24th April

Summer energy price increases

Supplier

Electricity increase 

Gas increase

Effective date 

Pinergy

+8.2%

N/A

11th June

Bright

+18%

N/A

17th June

Panda Power 

+9.8%

+9.8%

25th June

Flogas

+12.5%

+8.9%

26th June

Energia

+9.7%

+9.7%

8th July 

Iberdrola

+12.5%

8.5%

26th July

Electric Ireland

+9%

+7.8%

1st August

Bord Gáis Energy

+12.5%

+14%

8th August

Panda Power

+5.4%

No change

16th August

Pinergy

+11.4%

N/A

23rd August

Autumn energy price increases

Supplier

Electricity increase

Gas increase

Effective Date

SSE Airtricity

+10.6%

+10.7%

1st September 

Flogas

+18%

+18%

18th September

Bright

+26%

N/A

18th September

Iberdrola

+17.5% 

+18% 

1st October 

Panda Power 

+11.3%

+11.3%

4th October

Pinergy

+7.8%

N/A

11th October

Energia

+15.7%

18.5%

18th October

Gas and electricity prices in Ireland are already among the most expensive in Europe and with the economy still only recovering from the effects of the pandemic, and with ‘free’ renewable electricity at record output levels, many might be wondering why prices are increasing? 

Why are energy prices increasing?

There are three main reason why the price of gas and electricity is increasing. 

1. The price of fossil fuels on wholesale markets has skyrocketed 

Although the amount of electricity being generated from renewable sources has increased hugely in Ireland in recent years, over 40% of our electricity is still generated from burning gas and up to 10% or more from burning coal and oil. 

This high dependency on fossil fuels means we’re highly susceptible to any changes in their price, which can often be quite volatile.

And the price of gas and coal in particular has increased hugely on wholesale markets in recent months as the global economy recovers from the effects of the pandemic and demand for energy increases. Covid has also created supply chain bottlenecks, putting further upward pressure on prices in industries everywhere, and the energy market hasn't escaped.

Russia, the second biggest supplier of gas in the world, has also been accused of disrupting the supply of gas into Europe in order to stoke geo-political tensions.

And although oil only makes up around 2 to 3% of our electricity generation these days, the price of a barrel is now back to its pre-pandemic high of between $60 to $70, having increased more than 50% in the past few months alone.

Also of note is that the cost of building, operating and maintaining the country’s gas and electricity networks has been increasing in recent years.

For electricity this is the high voltage wires, pylons and electrical lines that transport electricity around the country and into people’s homes. 

For gas it’s the network of pipes, large and small, that connect the country’s towns and cities and transport gas into people’s homes and businesses. 

The electricity network in Ireland is made up of the transmission network (or grid) and distribution network, managed by EirGrid and ESB Networks respectively.

The gas transmission and distribution network is managed by Gas Networks Ireland.  

All suppliers must pay EirGrid and Gas Networks Ireland so-called Transmission Use of System (TUoS) charges (or tariffs), while the charges suppliers pay ESB Networks and Gas Networks Ireland to distribute electricity and gas to our homes and businesses are called the Distribution Use of System (DUoS) tariffs. 

Our TUoS and DUoS tariffs are around the third highest in the EU and combined make up about one-third of a typical household’s energy bill and ultimately these tariffs are passed through by energy suppliers to all customers in their bills. 

Last October, the CRU, Ireland’s independent energy regulator, announced an increase in these charges for electricity customers to help finance investment in the grid, which it said at the time would add around €29 to the average household’s annual bill. 

Of course, it was up to the suppliers as to whether they wanted to pass on these charges to their customers. However most did. And this has been leading to increased energy bills also.  

Estimated makeup of a typical household's final energy bill

Expense

Percentage 

Fuel generation costs  45%
Network tariffs 30%
Government tax (VAT and levies) 17%
Supplier overhead costs & profit 8%

2. Several power plants have been out of action

Power plants regularly go out of action from time to time for maintenance reasons. However in recent months a higher number than usual have been out of action, and for longer than usual due partly to Covid, which has put further pressure on prices. This includes two of the country's biggest gas-fired plants at Whitegate in Cork and Huntstown in Dublin, which usually supply about 15% of the country's entire electricity.

This has greatly reduced the supply of electricity to the grid, which coupled with high demand, is putting huge upward pressure on prices and also leading to concerns around potential power outages this winter.

3. There has been a lack of wind output

There has also been a lack of wind output in recent months. For example, according to the World Climate Service, June and July 2021 was the least windy period since at least 1960 in parts of Ireland, the UK, and the North Sea.

Indeed, on some days during the summer, over 90% of our electricity had to come from fossil fuels as there simply wasn't enough wind power being generated. 

The vast majority of Ireland's renewable energy comes from on-shore wind farms, so when it's not windy on land, gas and coal-fired power plants have to take up a lot of the slack. But as mentioned, gas has skyrocketed in price while some plants are out of action - all creating the perfect storm for an energy crisis. 

Why hasn't renewable energy led to cheaper prices?

Ireland’s level of renewable energy output has increased hugely in recent years and consumers often wonder why this hasn’t led to more downward pressure on electricity prices. 

Wind is 'free' after all, no?

It’s a controversial topic between supporters of green energy and climate change sceptics but we need to remember that renewable energy isn’t free. It’s far cleaner and better for the environment of course, but it costs money to build the turbines, solar panels and hydroelectric plants, convert the wind, sun and water into electricity and then distribute this energy into people’s homes.

And without getting too technical, renewable energy creates very different demands on the electricity network than fossil fuels and the two don't go well together, meaning renewable energy requires investment and money.

And this isn’t going to change in the near future. 

Indeed, under the Government’s Climate Action Plan, 70% of Ireland's electricity is to be generated by renewable means by 2030, with most of this to come from wind and solar. But for this to be possible, there needs to be considerable investment in the national grid.

Depending on which approach is taken, that could cost between €500mn and over €2bn. And this money will most likely be recouped through higher TUoS and DUoS tariffs. 

The increase in the number of data centres in Ireland also needs to be recognised. These centres consume vast amounts of energy. And a report from Moody’s in 2018 said the continued growth of data centres in the Republic would “significantly” contribute to a rise in electricity demand over the coming years, thereby putting upward pressure on prices.  

The final point is that renewable energy is volatile – we can’t tell very far in advance how windy or sunny it’s going to be and therefore how much energy will be generated. As a result, back-up power plants which generate their electricity from fossil fuels are still needed, and will be for a long time, for when renewable energy dips. But turning these on and off at irregular intervals depending on how windy or sunny it may or may not be isn’t very efficient and can add to costs too.

In short, while the move towards renewable energy promises the potential for far cheaper prices in the long term, over the short to medium term, consumers may have to deal with higher prices.  

Are we being ripped off with our energy prices?

The latest figures from Eurostat, the EU statistics agency, show that Irish electricity prices are the fourth highest in the EU at around 23% above average, with only Denmark, Germany and Belgium having higher prices. Gas prices are around the seventh most expensive in the region.

However, as we all know, Ireland is an expensive country for consumers anyway and Ireland’s energy prices are no more out-of-line with the EU than our other prices.

Cold comfort I’m sure...

Things like wages and business overheads also get factored into the price of supplying energy and these costs are also higher in Ireland than other European countries.

Switch and offset the price increases

For those seeking better value the best option at the moment is to switch. 

Despite the rising prices, there is huge competition among the 14 energy suppliers for new customers right now. In fact, the average energy switcher could save around €500 a year right now. 

It’s quick and easy to switch and with more time being spent at home than ever before, energy usage in households has never been higher, meaning it’s never been more important to ensure you’re on the most competitive tariff. 

You can compare gas, electricity and dual fuel tariffs across all suppliers right now using our energy comparison service

Secondly, consumers should also look at ways to reduce their energy consumption. Whether that’s installing energy-saving light bulbs or remembering to unplug appliances at night, there are lots of little things we can do to use less energy around the home. Check out these 15 ways to use less electricity and save money for more helpful tips.

Looking for more information?

If you’re seeking more information on energy price increases or help regarding switching, take a look at the following:

You can stay up to date on saving tips and recent energy news with our blogs and guides.

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