How can we offset energy price increases? - Radio Kerry

Image How can we offset energy price increases? - Radio Kerry

We’re in somewhat of an energy crisis at the moment in Ireland, with most gas and electricity suppliers increasing prices multiple times this year. Energia is now the latest supplier to increase prices for a third time in 2021. Due to these unprecedented price hikes, households are set to pay on average an additional €400-500 for their winter energy bills. 

Head of Communications at bonkers.ie, Daragh Cassidy, appeared on Radio Kerry to discuss why prices are increasing, the impact of demand on the electricity grid and how we can attempt to offset the energy price hikes.

Here’s an outline of the main points discussed by Daragh in the interview.

What’s happening in the energy market at the moment?

We haven’t had blackouts in Ireland for three or four decades, but we’re probably closer to them than we have been at any stage in recent times. The chances are still small but the grid at the moment is quite tight. 

There’s a bit of an energy crisis at the moment. We’re seeing rapidly rising wholesale prices, but there’s a lack of supply on the grid at the moment as well. Two major gas-fired power plants have been out of action in recent months. 

We also have the world economies reopening after Covid-19 and the demand is putting pressure on grids all over Europe. It’s an unusual and unprecedented time. 

You can learn more about why energy prices are increasing in this blog.

Relying on fossil fuels

The wholesale price of natural gas has surged by 250% since the start of the year. Last month alone it increased by around 35%, which is a huge jump. This feeds into electricity prices as gas generates most of it.

We hear a lot about renewable energy, however consumers must remember that still around 40-50% of our electricity is generated from burning gas. At any given time of the year, up to 10% can also be generated by burning coal and a small bit of oil. 

We still rely heavily on fossil fuels. So when these increase in price, not only will it impact petrol at the pump but also the price of our electricity as well.

Some suppliers, such as Panda Power, have announced four price increases this year. These seem like huge price increases and it’s easy to blame the suppliers, but they’re facing huge increases themselves. Unfortunately, the prices have to be passed on to consumers.

The situation in the UK

The UK market works a little differently from the Irish market. In the UK market, fixed tariffs are quite common where you’re guaranteed a price for your electricity for your year. In Ireland, we offer more variable rates and suppliers offer new customers a discount instead. 

In the UK suppliers are getting into trouble because they can’t honour that fixed-rate anymore. There’s always a risk when you decide to fix something but the suppliers didn’t think that prices were going to increase so much. It’s causing huge issues in the UK. 

The transition to green energy

Thankfully that shouldn’t be an issue here in Ireland and we shouldn’t see any suppliers go out of business for that reason here. It does bring up the discussion around what the Government here should be doing to help consumers pay less for their energy bills.

The transition to renewable energy sources is needed. Green energy is good for the environment but it can be expensive. Renewable energy isn’t free and it can also be quite volatile, for example when it’s not windy or it’s not sunny. 

This summer has been very calm and we’ve had one of the least windy summers on record. The wind turbines aren’t blowing so we still needed backup, with fossil fuel-powered plants. This isn’t ideal since two of the major power plants are out of action and the wholesale price of fossil fuels has skyrocketed.

We’re trying to move towards a less carbon-based energy system. However, we’re also connecting data centres at the same time, which consume huge amounts of energy. Things are going to be tight over the next few years.

What can consumers do?

There are a few ways consumers can try to save on their energy bills. 

  • The first way is to look at simple ways to use less energy around the home. For example, unplug appliances at night, don’t overfill the kettle, close windows and doors if the heating is on, replace bulbs with LED ones, etc. This can all save you a little bit of money each month, which will add up.

Check out these 15 ways to use less electricity and save money, and these top tips for heating your home for less to learn more.

  • Secondly, consumers can look at switching energy supplier. All energy suppliers are increasing prices but new customers can still avail of big discounts of 30-40%. If you were to switch, you could save around €500 on your annual bill. This would help offset the price increases.

Will the Government do anything?

The Government does need to take action and do something to help with energy bills this winter. There was talk of price caps, but they’re the reason the UK is struggling so much at the moment. 

At the moment for households around €80 goes towards the carbon tax, €60 goes towards the PSO levy and around €300-400 goes towards VAT annually. 

The Government is already taking a huge chunk of money from consumers when they pay their bills and a VAT reduction could be a very quick and easy way for the Government to help reduce energy bills this winter. This is what the Spanish government has decided to do.

Retrofitting homes

If this will be a recurring issue, people should consider retrofitting their homes. However retrofits aren’t cheap and can cost anywhere from €30,000-60,000 and some people don’t have this kind of money. 

We can’t forget about people who can’t afford to retrofit and upgrade their homes.

There are loans available, but the Government needs to evaluate the situation and back zero-interest loans. Retrofitting shouldn’t just be a way for the banks to make more money by selling people loans.

If you’re interested in retrofitting your home, make sure you review finance options available here or listen to this episode of our bonkers.ie podcast on everything you need to know about retrofitting your home

Compare energy deals today

Have you noticed a notable increase in your energy bills yet? While prices are on the rise, many suppliers still offer great deals to new customers which you can avail of to offset increases.

Use our energy comparison tool today and compare the very best electricity, gas and dual-fuel deals 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 or check out the most common questions we get asked about the energy switching process here.

Remember that you can stay up to date with all the latest energy news and top saving tips with our blogs and guides.

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