Irish electricity price increase to outpace EU counterparts

An analysis found that while the EU experienced a significant spike in energy prices following Russia’s invasion of Ukraine in 2022, many member states experienced a rapid decline in prices. However, Irish prices did not fall to the same degree.

Energy cost increases in Ireland have dramatically outpaced the general rate of inflation as well as that of other European countries over the last three decades, making Irish consumers' annual bills around €360 more expensive, a report has found.

An analysis conducted by the Nevin Economic Research Institute (NERI), shows that, by September 2025, electricity prices were over four times higher than in January 1996, while no other state in the EU15 group exceeded increases of three times their base. The EU15 refers to the members of the EU prior to its 2004 expansion. In that time, general Irish prices increased by 1.8 times.

Ireland moved from having some of the cheapest electricity in the EU15 in 1990 to being one of the most expensive countries for nearly all domestic consumption bands by early 2025 in euro terms.

The research found that Ireland has a significant "cost growth outlier" within the EU15. It said that, while general price levels in Ireland moved in tandem with price levels in the rest of the eurozone, electricity prices have undergone a massive divergence.

In addition, it said that while the EU experienced a significant spike in energy prices following Russia’s invasion of Ukraine in 2022, many member states experienced a rapid decline in prices. However, Irish prices did not fall to the same degree.

The research suggests that this disparity means Irish households pay, on average, around €360 more per year than their European counterparts.

Global energy shocks

The author of the report, Paul Goldrick-Kelly, said while global energy shocks affected all of Europe, particularly at the end of 2022, “Irish prices have not fallen back to the same degree as our counterparts since then”.

“In its current formulation, the Irish energy system is set up to fail Irish households. Policy must address our heavy reliance on natural and reconsider market design that closely links wholesale electricity costs to gas prices,” he said.

The research said the primary driver of the higher prices in Ireland is the significant role natural gas plays in the grid. Current market designs create a "close link" between wholesale electricity costs and natural gas prices, leaving Ireland more vulnerable to global gas market volatility.

It also said that Ireland’s “small and relatively isolated electricity system” has implications for price through various channels.

“A relatively small system limits the potential for economies of scale, and constraints on generator size imply fixed costs need to be recovered over less generation," the analysis said.

"Significantly, the relative absence of interconnections within the Irish system imply that cost setting and subsequent balancing tend to occur from sources within the Irish system, which may have to be met by relatively high cost sources rather than potentially cheap imported electricity,” the analysis said.

Another potential explanation for the price increases is the dramatic increase in electricity consumption.

“By 2008, consumption more than doubled in Ireland, relative to 40.1% for the eurozone as a whole. By 2023, electricity consumption had grown by more than 2.6 times relative to 1990 levels, and it continued to grow,” it said.

This is partly explained by population growth in Ireland. It is also explained by Ireland catching up with and eventually surpassing eurozone average electricity consumption per person in the last few years.

“This growth in overall consumption, alongside the historic underinvestment in network infrastructure noted earlier, has and will continue to place high demands on the electricity system, with implications for prices,” it said.