Thursday 22 February 2018

Highs and lows of our electricity costs: dearer for firms but less pricey for homes

tom Molloy

ELECTRICITY in Ireland is among the most expensive in Europe for business although it can be among the cheapest for residential users, according to the latest report by Eurostat, the European Commission's statistics agency.

The cost of electricity for industry is between 3pc and 52pc higher than than the European average, according to a 2008 report from Sustainable Energy Ireland. Comparisons are difficult because each market varies so much but Eurostat calculates that business here pays between 23pc and 29pc of the EU average and 21pc and 27pc of the European average.

That's a lot of money taken from the bottom line for companies struggling to survive in the present recession.

The main reason is Ireland's high reliance on gas to generate electricity. Around 60pc of our electricity is generated by gas compared to 24pc in Europe. Gas prices have been fluctuating wildly in recent years, pushing up electricity prices here.

Other fossil fuels have also been volatile and this has been another contributing factor as no country in Europe depends on fossil fuels quite like we do.

Our dependency on oil, gas and turf is 88pc compared with a 60pc average across the continent.

The link between dependence on fossil fuels and energy costs is quite stark. After Ireland, Italy and the Netherlands have the highest dependence on these fuels and the highest costs.

Another factor contributing to high costs here is the massive investment in the national grid after 25 years of neglect. The billions being spent on the grid must be recouped from customers.

Electricity prices for householders are also higher, according to Eurostat. Looking at the most common consumption patterns, electricity is between 17pc and 20pc higher than the 27 nations in the EU, making Ireland the fifth most expensive country for middle-of-the-road domestic consumption.

Confusingly, when these figures are adjusted for purchasing power, Ireland is between 9pc and 15pc below average, according to the 2007 figures. Following recent increases in personal taxation, it would seem logical for these figures to have changed.

It is a similar story for gas prices which are 17pc above average for domestic users. Most industrial and commercial customers pay 9-13pc more than average, except for one category of medium-use customers who pay 6pc less. Adjusting for cost-of-living differences between countries, electricity and gas prices in Ireland are 9pc and 2pc respectively below the EU average.

Irish Independent

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