Irish electricity prices reflect several key trends

A new ESRI review paper finds that Irish electricity prices reflect several clear trends. Drawing on Eurostat data, Ireland’s exposure to international gas prices helped push residential electricity prices to the highest in Europe in 2024, before taxes, levies and energy credits are taken into account.

Since 2022, government interventions such as VAT reductions and multiple rounds of energy credits shielded consumers considerably from rising prices. Once these factors are taken into account, residential Irish electricity was the eighth most expensive in Europe in 2024.

Taking into account relative purchasing power, residential Irish electricity prices fall to the fifteenth highest in 2024, close to the EU average. This finding should be considered carefully, however, because electricity prices themselves shape living costs and the adjustment method could potentially overcompensate. Further research is needed to assess relative affordability without this effect.

Other findings include:

• Network costs have risen in recent years, particularly in 2022 and 2023, as the procurement of emergency generation was financed by increased network charges. These increases in cost have been small, relative to the impact of rising fuel prices.
• Future network investments will increase costs to consumers. While notable, the magnitude will be less than that experienced in recent times. The CRU predicts that annual household bills may rise by €59–€106 by 2029/30. The way in which network tariffs are recovered may require reform to incentivise efficient system development.
• Renewable generation increasingly acts as a hedge against high wholesale prices due to changes in the design of renewable support schemes which came into place in 2019. Under this scheme, renewable generation pays a rebate back to consumers when market prices are high. In 2022/23, these rebates were greater than the cost of the scheme overall, meaning households received a credit of €89 via the 'PSO' item on their electricity bill.

Dr Niall Farrell, Associate Research Professor at the ESRI, said: “Irish electricity prices tend to track trends in natural gas prices. While many countries have reduced their reliance on gas-fired generation in recent years, Ireland has been less able to diversify away from gas-fired generation. Renewables provide an important hedge against fuel price volatility.”

Dr Muireann Lynch, Senior Research Officer at the ESRI, added: “This paper charts electricity price trends in Ireland and Europe. While interventions such as energy credits have alleviated much of the burden for Irish consumers, Irish electricity prices have been among the most expensive in Europe during the 2018–2024 period of analysis.”