Firms' energy bills rise over high level of fuel imports
Published 29/03/2013 | 05:00
Heavy dependence on imported fuel has left Irish business facing ever-rising energy bills in recent years, a period when reining in costs has never been more important.
Business users rely on access to affordable power for everything from the fridges that store and display retailers' food to the giant data centres behind cloud computing.
The price of power is a key factor in overall competitiveness.
Unfortunately Ireland, because of its heavy dependence on fuel imports, has experienced steep price hikes in recent years – out of kilter even with the rest of Europe.
Between 2007 and the end of 2011, overall Irish energy prices increased by 20pc.
That is at a time of falling energy use, as overall industry levels declined.
Irish hikes compare to an average rise of 15pc in the rest of the 15 countries in the Organisation for Economic Co-operation and Development (OECD), the group of rich countries that includes most of western Europe.
In 2011 alone the price of energy in Ireland rose by 11pc – in the rest of the OECD the increase was 6pc.
These increases reflect the country's dependence on foreign imports of fuel. Despite the wealth of fossil fuels beneath Irish coastal waters, Ireland is highly dependent on imports of oil and gas.
Thus the dramatic fluctuations in recent years in oil prices in particular have had major consequences for Ireland.
Oil prices for Irish industry increased by 55pc between 2005 and early 2012; this was the largest increase among the EU-15.
The average European increase in oil prices during this period was only 22pc.
Ireland has the highest overall dependency on electricity generation from fossil fuels among those countries; this top spot is also shared by Luxembourg and the Netherlands. Up to 64pc of the electricity used by the three countries comes from gas and oil.
Electricity prices have also risen steeply. Electricity costs for Irish industrial users increased by nearly half between 2005 and early 2012.
Ireland didn't experience the harshest price rises in the EU though; France saw the highest increase in prices during this period with the cost of electricity for its industries almost doubling since 2005.
One thing that has mitigated these rises in cost for Ireland is the fact that commercial users are now using less energy overall.
As a result of the contraction in the country's economy since 2006, energy demands were down by 16pc at the end of 2011, to 2001 levels.
This also meant that associated CO2 emissions fell by 17pc, to 1998 levels. Some 65 Irish sites have been accredited with an Energy Management Standard ISO 50001 award since its launch in 2011, a good amount by international standards.
The country must work to meet the requirements of the European Renewable Energy Directive, which says that 16pc of all energy consumed should come from renewable energy by 2020.
Given Ireland's climate it is not surprising that heavy emphasis is being placed by national policy-makers on wind energy.
Ireland's electricity is increasingly generated by wind, which accounted for 15.6pc of gross electricity consumption in 2011 compared to 9.7pc in 2010.
Irish IndependentFollow @Indobusiness