The impact of energy price increases and the carbon tax - Today with Claire Byrne

Image The impact of energy price increases and the carbon tax - Today with Claire Byrne

Families could be paying €400 more on average for their electricity and gas this winter. Energia is the latest supplier to announce a third price increase, raising its prices for residential electricity and gas by almost 16%. These increases will hit consumers hard when they come through on energy bills in a month or two.

Our Head of Communications at bonkers.ie, Daragh Cassidy, appeared on Today with Claire Byrne on RTE to discuss why energy prices are on the rise and the impact of the upcoming carbon tax increase.

Daragh's interview starts at 12 minutes and 45 seconds if you'd like to skip ahead.

Before we outline the main points discussed by Daragh in the interview, here are the main points of discussion covered in the news segment which asks what is being done to ensure the resilience and security of energy supply at times of peak demand and could we be falling into a winter of power shortages and blackout?

Claire Byrne was joined by Ibec CEO, Danny McCoy and Green Party MEP, Ciarán Cuffe.

What's the future for energy in Ireland?

The excess demand that we have for energy is going to be reflected either in rationing or higher prices.

We need to invest in the infrastructure grid and need to be decarbonising the ways we produce and distribute energy.

However, it's still good, in terms of employment and business, that we're seen as a frontier economy for the types of iconic investments such as large data centres.

Does Ireland have to be the largest data centre hub in Europe?

This is of course a problem for future energy demand and has a direct link to the current energy shortage.

However, there's a lot to be said for Ireland allowing foreign direct investment companies such as Amazon and Google build their data centres here.

Very often these multinationals contribute a large percentage towards our overall economic wealth and enable us to invest in infrastructure which in turn allows us to move to decarbonising and taking on renewable energy onto the grid.

Conversely, long-term data centres aren't in the top of the league when it comes to high-paid jobs per amount of energy consumed.

However, there is room for more data centres in Ireland but the kind of planning conditions involved must change. For example:

  • Water should be harvested from the roofs of data centres
  • Energy needs to be managed 
  • Back-up power generators should be available to the grid if there's a surge in power supply

We have a limited carbon budget in Ireland and it should be used wisely.

Have the gas-fired plant outages left us in a vulnerable energy position?

Both should be back online in the early autumn which is reassuring, but the failure of gas has led to problems for the grid so we need to wean ourselves off our reliance on gas and fossil fuels faster if we can.

Thing to help with this acceleration are:

  • Pushing off-shore wind farms
  • More electricity interconnectors linking Ireland with Scandinavia and Iberia for importing wind energy
  • Investing in energy efficiency such as green home renovations

Should consumers be prioritised for green energy and not data centres?

It's a catch 22 in many ways as a lot of energy will be used by data centres, but if it's managed more wisely these data storage facilities will help to encourage more working from home and less travelling for work.

The grid also needs to be reinforced with more cables before more data centres are even built, particularly in Dublin where there's insufficient capacity on the grid.

This shortage in cabling is also leading to significant delays in energy being imported into the capital.

Should large data centres be producing their own energy/water supply?

A lot of companies already have plans for self-generation in place which goes to the heart of what EirGrid, who is in charge of the network, is looking at now: what's the best energy model?

To lose Ireland's economic positioning however by refusing data centres would be folly for the future.

Finding a trade-off is important when it comes to economic activity (and the costs that come with that), and how we generate renewable energy.

When will consumers start to notice these price increases?

Gas and electricity consumers start to receive their summer energy bills in August and September, so they will have already started to notice a price increase.

However, this is sort of a crisis that’s bubbling, that households aren’t really aware of. When people start to receive their winter bills in December, January and February, it’s really going to hit them quite hard.

All 14 energy suppliers in Ireland are at different phases of the energy price increases. Some suppliers have had to raise prices four times and those increases will add around €700-800 to the average household energy bill, which is a huge sum of money. 

Why are energy prices increasing so much here?

There are a few reasons why we’re seeing energy prices increase so much.

  1. The main reason is that the price of fossil fuels has skyrocketed on international markets in recent months. This is due to both Covid and supply and demand. A lot of production shut down during Covid and restarting that has been challenging. There’s a huge mismatch between supply and demand. This has increased the price of gas in particular, but the price of coal is also going up. 
  2. The level of wind output in recent months has been below normal levels. June and July of this year were two of the least windy periods on record in Ireland according to the World Climate Service. This has put pressure on electricity prices.
  3. There have been two major gas-fired power plants that have been out of action in recent months. These go down regularly for maintenance and cleaning. This reduces the supply of electricity to the grid. 

There’s been a mix of rapidly increasing prices on the wholesale market, a lack of wind output and a lack of electricity generation.

If you’re looking for more information on why energy prices are increasing, take a look at our recent blog post on the topic.

Will increases hit across the board?

Despite there being 14 energy suppliers in Ireland, the issues hit across the board and all suppliers are facing the same problems. No supplier is immune from this. Some of the bigger suppliers, like Bord Gáis and Electric Ireland, have been able to hold off on drastic price increases.

All suppliers have increased prices at least once this year and some, such as Panda Power, have even increased prices four times so far. 

Carbon tax

The carbon tax is also due to go up in the next budget by €7.50 per tonne. At the moment the carbon tax adds around €80 a year to the average annual household bill. If the budget increase goes ahead, we’re looking at an additional €17.

With energy prices increasing so much at the moment anyway, this will be a controversial topic.

Switch and save today

Are you worried about the increasing cost of energy? You can easily compare and switch to a cheaper supplier on bonkers.ie which will help offset the energy price increases.

It’s quick and easy to switch and can all be done on bonkers.ie in the space of a few minutes. Use our energy comparison tool to compare the best deals today across all 14 energy suppliers nationwide.

If you’re seeking advice when it comes to switching, have a look at our guide on 7 things to consider when switching energy supplier.

However if you’re still in contract, you could be subject to an early exit fee if you switch energy suppliers. Instead, consider ways you can use less energy and reduce your household bills. Take a look at these 15 ways to use less electricity and save money to learn more.

Don’t forget to review other bills too and compare available deals for services such as broadband, insurance and banking products to see how much more you could save!

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