Irish electricity prices have become the focus of a great deal of analysis and comment in light of recent increases in cost and their contribution to a general cost of living crisis. This study examines this trend and investigates the extent to which Irish electricity prices have increased over time relative to other states. This study also aims to investigate whether Irish prices have changed in terms of their relative ranking within a group of comparator states.
The analysis finds that electricity prices in Ireland have risen substantially from the mid 1990s, with the period from 2001 to 2007 showing particularly pronounced price growth. This price growth outstripped price increases in the economy as a whole (general inflation) in both Ireland and the Euro area. Irish electricity price growth from the 1990s is also dramatic compared to other EU states, showing much higher cumulative cost growth, notwithstanding short-term price shocks observed elsewhere. A comparison of prices per unit of electricity suggests that Irish prices have gone from relatively cheap to comparatively expensive for many consumption bands. This is particularly true of prices excluding taxes and levies, the latter price component representing a relatively minor element of prices in both absolute and proportional terms over time, and a net subsidy more recently.
A further analysis of these pre-tax and levy unit prices was performed on the energy and supply cost and network cost components that make up these unit costs in Ireland. The analysis suggests that, while there is evidence of elevated network costs in Ireland, recent price movements were largely related to energy and supply costs. These costs are influenced in large part by the significant role played by natural gas within our electricity system and current energy market design which translates into a close link between wholesale costs and natural gas prices. The report concludes with a brief analysis of other potential cost factors and possible policy remedies and avenues for further research.