The reason for Ireland’s high electricity prices is “difficult to establish”, the Economic and Social Research Institute (ESRI) has said.
Residential electricity prices in the second half of last year were roughly double what they were in 2018, an Oireachtas Committee on Climate, Environment and Energy heard on Wednesday.
Citing Eurostat data, the ESRI said Irish electricity prices have fallen in the last two years, from their 2023 peak, but the decline has been less than in many other European countries.
In addition, prices are likely to rise further, with more increases over the next five years, Niall Farrell, associate research professor with the ESRI, said on Wednesday.
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“According to the Commission for Regulation of Utilities [CRU], residential energy bills may rise by an estimated €80 annually,” he told the committee.
Mr O’Farrell said “residential electricity prices in the second half of 2024 were roughly double what they were in 2018, before changes to taxes and levies are taken into account. Policy measures, including energy credits and reduced VAT rates, helped shield consumers from some, but not all, of this additional burden,” he said.
“The exact reason is difficult to establish, but several plausible factors exist. Ireland’s limited ability to diversify away from gas-fired generation, for example, reduces the scope for wholesale price reductions,” he said.
Mr O’Farrell said the gap between wholesale and retail electricity prices had widened in many European countries since the energy crisis sparked by the Russian invasion of Ukraine, with the higher levels being paid by homeowners. However, while this had happened in “many” European countries, it had happened “to a greater extent in Ireland”, he said.
[ Wholesale electricity prices down 18.5% but consumers still facing high billsOpens in new window ]
“Possible explanations include fewer risk-mitigation options and weaker competition in the Irish market. Limited public data constrains understanding and may suggest a role for regulator inquiry,” he said.
He noted the CRU was undergoing a network charging review, which he said was welcome.
Robert Deegan, principal officer with responsibility for retail energy with the Department of Climate, Energy and the Environment, told the committee the latest data from Eurostat showed “in nominal terms, Ireland ranked fifth [highest] for electricity prices and eighth for household gas prices” in the EU in the first half of 2025.
“Price setting by electricity suppliers is a commercial and operational matter for the companies concerned,” he said.
He identified “reliance on imported fossil fuels, particularly gas, for electricity generation,” as a driver of higher energy costs. “Furthermore, our location as an island on the periphery of Europe, and our low density and widely dispersed population also influence prices,” he said.
He said the Government’s energy taskforce had proposed the extension of the lower VAT rate to energy bills and expanding the fuel allowance eligibility to Working Family Payment recipients. Many of these proposed measures were adopted in Budget 2026, he said.
However, Alan Wyley, chief executive of the charity EnergyCloud, said since the publication of the Programme for Government, which commits to tackling fuel poverty, the State has continued to turn off renewable generated electricity, primarily at night, because of a lack of demand.
He said “every single day” more than €1.3 million of clean, renewable wind energy was being wasted, because the Government had not embraced available technology to give it to those in energy poverty.
