How the rising cost of energy will impact bills this winter - Classic Hits
Families face paying an average of €400 extra on their energy bills this winter due to incessant price increases. Most energy suppliers have raised prices multiple times so far this year with some, such as Panda Power, even raising prices four times.
Head of Communications at bonkers.ie, Daragh Cassidy, appeared on the Niall Boylan Show on Classic Hits to discuss why energy prices are increasing, the possibility of blackouts and how households can offset energy price hikes by switching energy supplier.
Here’s a breakdown of the main points discussed by Daragh in the interview.
Why are prices increasing?
We’re in a bit of an energy crisis at the moment. 20 years ago Ireland had among the cheapest electricity in the EU, whereas now we have the fourth most expensive electricity in the EU.
Certainly, energy costs have started to eat more into people’s pockets in recent years.
There are a few main reasons why prices are on the rise.
- There’s a huge mismatch at the moment between supply and demand, particularly for gas. We use a huge amount of gas for our electricity generation. We don’t use much oil anymore to generate electricity. When the price of gas goes up, not only does the cost of natural gas rise, but also the cost of electricity goes up. This mismatch in supply and demand is partly due to Covid-19, with world economies opening back up. The price of gas has gone up about 200% over the past few months.
- There’s been a lack of wind output over the past few months. Greener energy is important, but it’s not as stable as other energy sources. This summer in particular was quite calm, it wasn’t windy. This meant we had to rely more on fossil fuels than usual.
- Two major gas-fired power plants, Huntstown in Dublin and Whitegate in Cork, have been out of action in recent months. These usually supply around 15% of our electricity, but they’re down for maintenance. This has put a huge amount of pressure on the grid.
For a more in-depth look at why prices are increasing, take a look at this blog on the topic.
Could there be energy blackouts this winter?
There have been rumours circulating in the news that there may be blackouts this winter but we wouldn’t want to alarm anyone.
Despite the risk being quite small, we are more likely to have a potential blackout this winter than any other time in the past three or four decades.
How can people offset these price increases?
One of the quickest and easiest ways to save is to switch energy supplier and get a new customer discount.
There are 14 energy suppliers in Ireland, so there’s lots of choice. Some suppliers even offer discounts of up to 30-40% off standard rates for the first year if you switch to them. This means households could save up to €500 a year on their energy bills.
All providers are purchasing the same electricity from the same energy grid, so when one increases prices the others tend to follow.
Energy cancellation fees
If you’re still in contract and decide to switch supplier, you may end up paying an early exit fee. This is usually €50 per fuel.
Even if you are mid-contract, switching is something to look into as you could still save a significant amount even after paying the early exit fee.
Will the grid be able to handle more demand?
The grid will come close to full capacity with all of the extra demands being put on it. Not only are we seeing an increase in popularity of electric vehicles, but also electric heating.
We’re seeing a move away from gas and towards heat pumps for heating homes.
To increase capacity in the grid, it’s estimated that there’s investment of between €500 million to €2.5 billion needed over the coming years. These costs will likely end up being passed onto consumers.
Switch and save
As mentioned, there is value to be had by switching to a cheaper energy supplier. Run a quick comparison on bonkers.ie and see how much you could save today!
Before making the switch you might find it beneficial to check out one of our helpful energy guides, such as our guide on frequently asked questions about switching energy supplier.
If you are still in contract and don’t want to pay an early exit fee, consider adjusting your habits around the home to reduce your energy consumption. Here are 15 ways to use less electricity and save money, and 10 ways that you can heat your home for less this winter.
Get in touch with us
Are you worried about the rising cost of energy? Have you considered switching to a cheaper supplier? We’d love to hear from you.