Yesterday, Electric Ireland announced plans to increase its electricity and gas prices from November, just three months after its last price hike.
It’s the latest company to increase energy costs more than once this year – meanwhile, Energia announced three separate increases, with Pinergy and Panda Power having announced four.
So why are energy prices soaring?
The big picture
It might not be very comforting to know, but rising energy prices are not just an Irish problem.
Everywhere, from Europe to the United States to Asia, prices are higher – and all because the wholesale price of gas has increased dramatically.
Since the start of the year, wholesale gas prices have risen 135% – and are up 38.5% in the last month alone.
This inevitably spills over to the end consumer, which is why everyone’s energy bills go up.
Supply and demand
Of course, prices don’t tend to move so dramatically for no reason, and there are a number of factors driving the energy market.
For example, a recent heat wave in Asia caused an increase in the demand for energy to power air conditioning units.
At the same time, the industry has recovered from the pandemic faster than expected, which means that demand from this sector has also been higher.
In order to try to better manage its energy supply, especially at the approach of winter, Europe still has a large supply of gas. However, colder weather last year – followed by a cold snap in April – has shrunk this store and it has yet to be restocked.
It is now estimated to be around 16% lower than normal.
And while that usually results in an increase in supply, it’s not a prospect this year.
Some vital gas fields and factories that supply the region have been taken offline for maintenance, resulting in a drop in the amount of gas flowing from Russia to Europe.
An acute problem for Ireland
Although this is an international problem, the nature of Ireland’s energy supply makes the country particularly vulnerable.
More than half of Ireland’s electricity is produced from gas-fired power stations, which means that an increase in gas prices has a disproportionate impact on the cost of electricity here.
Ireland also tends to depend on the east-west interconnection for part of its electricity supply, but as the UK market faces its own price pressures this is not helping the market at the moment.
The growing infrastructure of the country’s wind farms may help dampen the rise in fossil fuel prices, but calmer weather in recent months has meant that supply there is also declining.
Meanwhile, two Irish power plants are currently offline for maintenance, which has also reduced supply to the market.
What can be done
There is little that Ireland can do to change the course of global wholesale gas prices, which means higher prices are inevitable for consumers here.
In the long run, the hope will be that a better renewable energy infrastructure will make the country much less dependent on the price of gas.
But in the short term, it is recommended that consumers shop around to make sure they are getting the best possible price.
While all of the major energy companies have raised their prices, some have made more significant changes than others.
According to comparison site Bonkers.ie, some companies’ price increases would add around $ 800 to the average annual household energy bill.
Others, including Electric Ireland, would see a change closer to € 330 per year.
Along with finding the right supplier, consumers should also take the opportunity to review their home energy use – to make sure they don’t waste money in the months ahead.