In August Irish households paid 57% more for Electricity according to the CPI than in early 2021. Unfortunately the Government appears reluctant to spell out clearly how prices are determined, perhaps because they can do little about it in the short term.
Wholesale prices are set to meet demand in the EU and so it is the price of the last unit supplied which determines price- a marginal cost model, Consequently the lower price of wind energy or nuclear power has no impact , with natural gas, LNG and oil the key. Blaming profiteering by say gas or oil companies is pointless as the model chosen is deemed necessary to meet demand on a real time basis. In Ireland’s case our domestic production of natural gas is falling steadily and gas imports have risen sharply, while we do not import LNG. So the price of natural gas is key and although the EU imports more from Norway and LNG from the US it is still dependent on Russia for over 20% of energy needs, albeit well down since the Ukraine invasion.
Following the spike in prices that followed, the EU brought in a short term emergency rule, allowing Governments to tax profits of lower cost producers to fund consumer subsidies but that has past. So whether renewables are 50% of electricity supply or 75% the price of gas is still what matters and unlikely to fall, absent a global downturn. Higher renewable usage may be positive for other reasons but it won’t affect price.
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The Irish Economy- Forecasts and Analysis