Energy price increases and renewable alternatives - C103
Iberdrola has announced another price increase for both electricity and gas customers, which will see bills increase by 17.5% and 18% respectively from October 1st. While it’s disappointing to hear, the news is unsurprising. Many of Ireland’s energy suppliers have raised prices multiple times since the beginning of the year.
Our Head of Communications, Daragh Cassidy, appeared on C103 to discuss why energy suppliers are increasing prices, what renewable energy options there are and how bill payers can switch and save hundreds on their annual energy bills.
Here’s a breakdown of the main points discussed by Daragh in the interview.
How is Iberdrola justifying these price hikes?
This is a huge increase from Iberdrola, but the company isn’t the only supplier raising prices at the moment.
There are three main reasons why prices are going up so much:
- The price of fossil fuels has shot up on international markets over the past few months. We still rely on these fossil fuels for a lot of our energy needs. We hear a lot about renewable energy, but around 50-60% of our energy still comes from the burning of fossil fuels, like gas, coal and oil. So when the price of fossil fuels goes up, the price we pay for our energy goes up too.
- It hasn’t been so windy over the past few months. When the wind turbines aren’t working, we need to rely more on fossil fuels.
- There have been two power plants out of action recently, too. One in Whitegate in Cork and one in Huntstown in Dublin. These usually supply around 15% of Ireland’s electricity, so this has also put pressure on prices.
As the world economy slowly opened up after Covid, there’s been bottlenecks in a lot of markets, including the energy sector.
Why are the power plants out of action?
The power plants are out of action for maintenance reasons and cleaning. It’s not unheard of for power plants to go down from time to time to be cleaned and checked, but these two plants have been down for longer than usual. This is partly due to Covid.
It’s hoped they’ll be back up and running in the next few weeks.
Do we need to reevaluate wind power?
Renewable energy is great for the environment but can be expensive. It’s not free and there’s a lot of investment that’s needed. A lot of this cost is going to be passed onto consumers.
People are being a little bit naive if they think that renewable energy will lead to lower prices in the immediate future. We may see the financial benefits in 15-20 years.
In Ireland, a lot of our renewable energy is generated from wind and it’s on-shore, so it’s land wind. When it’s sunny, as it was in June and July, it doesn’t tend to be very windy on land.
We may need to start investing more in solar energy so that if one isn’t working, the other is.
Is there a risk of blackouts?
Eirgrid has expressed growing concerns about power supplies and the possibility of rolling blackouts. However, if we get the two power plants back up and running, we should be ok.
The risk of blackouts is probably higher than it’s ever been. The Irish electricity grid and network are very well managed and work extremely well in an international context, but the risk is there this winter.
There’s a lot of demand on the grid now from data centres and it’s reported that within the next 5-7 years, around 30% of our electricity demand will come from data centres. This will put a huge amount of pressure on the grid.
It will need to be carefully managed over the coming decade to make sure the transition to renewable energy, while we’re still accepting all the data centres, doesn’t lead to blackouts or power shortages.
What about using hydropower as a source of electricity?
The technology isn’t quite there yet for hydro energy. In the shorter term we could benefit from some offshore wind farms as there’s often wind offshore that doesn’t reach land.
We also need to invest more in solar. With new solar technology, from April to September it doesn’t even need to be sunny for solar energy to work. The light in the sky will often be more than enough.
We have to also look at ways to store renewable energy. At the moment we have a grid where the energy has to be used almost as soon as it’s made and it can’t really be stored. A lot of wind energy ends up going to waste at the time, but we may be short of it a few days later.
Smart meters are gradually being rolled out across the country and they should help people save a little bit of money going forward.
Smart meters will eventually allow suppliers to offer households several different smart meter tariffs based on their personal usage. For example, if you have an electric car you could sign up for a tariff that has super cheap electricity between 2-4 AM when you might plug in your car.
When you sign up for a smart meter you’ll get an in-house display unit that will show you when you’re using energy and how much you’re using. It will give people more visibility over their energy consumption.
If you do sign up for a smart tariff you can’t go back, which is something to be aware of.
How many energy suppliers are there in Ireland?
We have 14 energy suppliers in Ireland at the moment. There’s never been more choice for consumers.
What discounts can new customers get?
You may wonder what the point of switching is if all suppliers are raising their prices at the same time, but suppliers offer great discounts for one year to people who switch.
If you move to a new energy supplier, you’ll usually get a 30-40% discount off standard rates for your gas and electricity for an entire year. Based on average usage, you could save around €500 a year which would more than offset the price increases that we’ve seen.
Switching energy suppliers is the quickest, easiest way for people to beat these price increases.
Use our energy comparison tool to compare the best deals today across all energy suppliers nationwide and see how much you could save!
People can also look at simple ways around the home to use less energy. For example, make sure you don’t overfill the kettle, turn off lights, unplug appliances, switch to LED lightbulbs, etc.
The switching process
Switching energy supplier can all be done online. There may be lots of suppliers, but the network is the same, so switching isn’t complicated.
There’s very minimal effort involved and you only need the following to switch:
- A GPRN number if switching gas and an MPRN number if switching electricity
- A recent meter reading
- A good estimate of how much energy you use
- Some personal details, such as your name, phone number, address, etc.
Read our helpful guide on what you need to switch suppliers for further information.
The process online only takes about 5 minutes and then the switch gets completed within about a week.
Get in touch with us
Are you an Iberdrola customer? Were you expecting another price hike? Let us know!