Potential elevations in electricity costs: a prospective analysis
Ireland's electricity network is set for a significant overhaul in the coming years, as the country prepares to meet the growing demand for electricity and transition towards a cleaner, more sustainable energy system. This transformation, driven by factors such as the surge in demand from data centres, the rise of renewable energy sources, and the increasing adoption of electric vehicles, will result in an increase in network charges for Irish households.
According to the Commission for Regulation of Utilities (CRU), Irish households can expect at least €6 added per year to their network charges from 2026 to 2030, contributing to their electricity bills. This projection aligns with ongoing investments in electricity infrastructure necessary to support the transition to cleaner energy and increased electrification.
The need for increased recharging infrastructure for electric vehicles and rising renewable generation capacities, with ambitious targets for onshore and offshore wind power, will drive network expansion and upgrades. This investment is likely to influence electricity network charges and bills, as the system transitions to a more electrified and renewable-based grid.
Investments in grid capacity and resilience are crucial to handle the increased demand and renewable integration, supporting Ireland's climate goals. Drawing from the UK's experience, while network charges may rise moderately in the short term, grid upgrades can lead to net savings in the longer term. Upgraded networks reduce constraint costs and improve the integration of renewable energy, potentially lowering overall bills.
ESB Networks and Eirgrid propose an investment of nearly €19 billion over the next five years to maintain and upgrade their networks. The CRU will assess the cost to consumers on a year-by-year basis. Irish consumers currently pay approximately 30% more for electricity than the EU average, with an average annual bill of €1,800.
The CRU encourages customers to shop around and switch suppliers regularly to get the best deals and minimize the impact of any increase in charges. Switching energy providers every year when the contract is up can help customers avoid paying more than necessary. Later this year, customers will be hit by network charges from the current round of approved investment in the network, covering 2012-2025, which are expected to be substantial.
It's important to note that the level of increase will depend on factors including the level of delivery by network operators and how suppliers choose to recover network costs. Ireland's relatively dispersed population and one-off housing contribute to comparatively higher grid maintenance costs on a per capita basis.
Importing low-cost electricity from abroad isn't straightforward due to Ireland's island location and lack of interconnectivity. The CRU is proposing an initial €14.1 billion grid investment between 2026 and 2030. Electricity suppliers can individually determine what level of charges they pass onto customers.
While these network charge increases will have a modest upward impact on household electricity bills, they underpin long-term savings and a cleaner, more reliable electricity system. The expansion and modernization of the grid infrastructure are expected to support cleaner energy and could reduce other costs embedded in electricity bills over time.
The rise in network charges for Irish households, driven by investments in electricity infrastructure for cleaner energy and increased electrification, will likely impact personal-finance budgets. This investment in grid capacity and resilience, particularly in renewable energy generation and electric vehicle recharging, is also expected to influence business costs in the finance and industry sectors as Ireland transitions towards a sustainable energy system.
