Rising Energy Prices but Who’s At Fault?

September 30, 2021

What are the major causes of this year’s substantial rise in Irish and European energy prices, and why is Eirgrid expecting power blackouts this Winter?

Unfortunately, there is no single underlying issue that can be blamed on this situation. Findings reported by Eirgrid suggest that the demand in electricity in Ireland keeps growing, primarily driven by datacentres, rise in gas prices and an overall increase on the demand of Ireland’s electrical supply.

Surging Demand

At present, gas provides more than half of Ireland’s electricity. Demand for gas and electricity has surged this year as economies and businesses reopen following the disruption of the past 18 months.

Fintan Whelan, former corporate finance director of Airtricity states “There normally is a higher demand for gas in the Winter, so the prices go up and there’s a lower demand for gas in the summer, so that’s when prices go back down”.

“The trouble this year, is that demand for gas didn’t decline this summer and neither did wholesale prices, Inventories have been drained because of the lack of a “storage buffer” explains Whelan.

Meanwhile, low wind speeds have forced European Utility companies to rely on Fossil Fuels. While, Russia is sending less natural to Europe and sourcing alternatives has been tricky.

The overall impact of these incidents has amplified soaring energy costs adding significantly to the Eurozone inflation figures, pushing the annual rate increase of 3% well above the European Central Banks 2% target.

Data Centres

Considering Ireland has 30 data centres at present which consume 11% of the country’s energy supply. If all proposed data centres projects were completed, they could account for 70% of Ireland’s electricity usage by 2030, an Oireachtas Committee Member has heard. Dr Bresnihan states that in the past four years alone the increase in electricity usage by data centres is practically the equivalent of adding 140,000 houses to the national grid each year.

An average data centre would be comparable to the load usage of a city like Kilkenny. “Meeting ambitious and renewable energy targets by 2030 will be far more difficult with the addition of more datacentres to the grid” he warned. Considering this will put an immense strain on the energy supply and demand.

Power Stations

Fuel and gas prices have increased by 19.6% from the start of the year until August, the central Statistics Office has showed recently.

The recent temporary closure of two important gas-fired electricity stations: Bord Gáis in Cork and Energia in Dublin. The two stations have been shut down for maintenance for the majority of 2021 due to “unexpected and significant failure of equipment”.

Concerns have been raised that such shortfalls could result in black outs and power cuts over the next few months. While creating more demand on the grid.

However, the Minister for the Environment Eamon Ryan said that he doesn’t expect blackouts to be a feature of the Irish Winter. The Government expects the power plants to be fully operational within two months – but Whelan believes that the difficulties could be prolonged. Only time will tell.

Winter Bills

Meanwhile, this Winter consumers are being urged to shop around for their energy prices to save money.

Doing things such as Installing energy saving light bulbs, switching off appliances at night, not overfilling the kettle are all examples of ways to be more energy efficient.
Readers should do their own research to figure out ways of saving energy around the home, because it all adds up.

Consumers who shop around are estimated to make savings of 30-40% for the first year from their new suppliers, which could roughly reduce your energy bill by €500 per year

A Renewable Future

Ireland’s energy grid will have to undergo a dramatic transformation over the coming years as the country shifts towards renewable energy sources.

The target set by the Government states that by 2030, 70% of Ireland’s electricity consumption should be powered by renewable sources. Between new homes, a growing population, and the implementation of data centres, who’s to say these demands can be met as the strain becomes more severe each year.

Laura Mehigan states that “The most challenging period for this could be within the next few years”. “Renewable energy sources such as wind, solar and bioenergy have the potential to play a huge role in Ireland’s energy sector in the coming years”.

Clean Energy

On another note, renewable energy sources are a fantastic way to safeguard your home against rising energy bills. Of course, we are partial towards solar energy systems, which are becoming a much more accessible option for many home buyers thanks to government funded grant schemes.

Meskill, T, (2021) “Date Centres could use 70% of electricity grid by 2030”: RTE News. Date Accessed: 30.09.21. Read full article here: Data centres could use 70% of grid by 2030 – expert (rte.ie)

Curran, I, (2021) “Supply and demand: What’s behind the surge in Irish and European energy prices this year?”: TheJournal.ie. Date Accessed: 30.09.21. Read full article here: Electricity supply interruptions could have ‘huge’ impact on Irish society, expert warns (thejournal.ie)

Taggart, E, (2021) “Electricity supply interruptions could ‘huge’ impact on Irish Society, expert warns” TheJournal.ie. Read full article here: Supply and demand: What’s behind the surge in Irish and European energy prices this year? (thejournal.ie)

Eirgrid, (2021) “Eirgrid Predicts Electricity Supply Challenges Over Coming Years with Publication of Key Report” Eirgrid Group. Date Accessed: 30.09.21. Read full article here: EirGrid Predicts Electricity Supply Challenges Over Coming Years with Publication of Key Report (eirgridgroup.com)



Your Complete Guide to Solar Panel Installation


Ireland’s Climate Action Plan 2021