What Ursula von der Leyen’s EU energy plans mean for Ireland’s soaring household bills
The Government has said data centres are crucial to the economy, but it will soon be obliged to adhere to European regulations aimed at making information about their operations more transparent. Picture: David Creedon
When European Commission president Ursula von der Leyen stood up two weeks ago to deliver the landmark annual state of the union speech, many of her officials were in a bind.
After it finished, they would start receiving calls from journalists asking for more detail on the grand plans she would set out that would have impacts across the 27 countries that make up the European Union.
However, there was a problem: They had no idea what she was going to say.
They weren’t briefed in advance on the content of her speech, and they couldn’t prepare how to expand on the policies announced before time.
Speaking to the this week, multiple commission officials said this was — to put it mildly — unusual. As with everyone else who was tuned in, they were hearing this information for the first time.
While Ireland may feel quite far away from Brussels, some journalists may have been straight on the phone to these officials for an explanation on one topic above all.
“We will also put forward a series of packages on affordability and the cost of living,” Ms von der Leyen said. “The first is energy. When energy costs rise, it is not just numbers on a bill. It is every single part of people's lives that is affected.
She said the EU would act to get rid of “dirty Russian fossil fuels”, create “clean homegrown energy”, invest in infrastructure and interconnectors, along with a new grids package to boost the capacity of the grid. She even explicitly referenced nuclear power, which raised an eyebrow in many quarters.
She added: “And to go with that, I am presenting today a new initiative called 'Energy Highways'. We have identified eight critical bottlenecks in our energy infrastructure.
“From the Øresund Strait to the Sicilian Canal. We will now work to remove these bottlenecks one by one. We will bring governments and utilities together to address all outstanding issues, because Europeans need affordable energy right now.”
The European Commission officials were none the wiser as she spoke on what these energy highways would be, how they’d bring ordinary families’ energy bills down, and how soon they would.
The announcement just adds to their in-tray of multiple sets of policies, laws, and guidelines developed in recent years aimed at doing just that, which officials admit “don’t get much attention”.
While Ms von der Leyen’s comments on Israel and migration may have grabbed more headlines — and may explain why she kept the contents of her speech so close in advance — it may be the direction Europe now takes on energy that could have the most tangible effect on Irish households in the months and years to come.
Nobody in Ireland who is about to see their bills surge as we head into winter would disagree that some action is badly needed. In the last few weeks, we’ve seen Bord Gáis Energy, Energia, SSE Airtricity, Flogas, and Pinergia all announce they would be hiking their prices.
The cost of living developed into a full blown crisis after Russia invaded Ukraine, but inflation for the essentials we need has had an unwelcome resurgence in recent times. Grocery prices are rising significantly. Insurance price rises far outstrip general inflation. Fuel remains stubbornly high.
And then we have energy. All eyes are on the budget in just a few weeks’ time and whatever form Government supports may take.
But, at European level, there are a slew of measures under way with the overall goal to reduce the bills that consumers receive. Prompted by the geopolitical events in recent years, the need to get a grip on all of this was only heightened by the Russian invasion of Ukraine.
“The priority was always to try to secure lower prices,” one senior European Commission official said this week.
“To bring down prices, we need to become more energy independent. And we need to speed up the energy transition.”
There is no one single plan to do that, but many with lofty titles and acronyms.
There’s the affordable energy action plan, published earlier this year, setting out eight actions EU countries can take to reduce the cost of energy bills. It includes all the kinds of things we hear about regularly at home, including building grid capacity, improving energy efficiency of buildings, and building resilience from extreme weather events and cyberattacks.
There’s the RePowerEU roadmap, published in May, on plans to end Russia gas and oil imports once and for all.
Just this week, as part of Donald Trump’s lengthy diatribe against pretty much everyone in his major United Nations speech, he was disdainful of Europe’s continued reliance on Russian imports, which is a position European officials admit isn’t ideal. Albeit he did go further and claim that climate change was a hoax and all the efforts to pivot to renewables were a waste of time.
Elsewhere, the European Union is also working on things like a citizens energy package, a heating and cooling strategy, an electrification action plan, and a revised EU energy security framework.
The forthcoming grids package, meanwhile, aims to accelerate the expansion, modernisation, and digitalisation of grids. There’s also the renewable energy directive, which sets targets in many areas such as transport, buildings, planning laws, industry, and skills.
It’s all meant to contribute to countries in very different situations. Poland still relies heavily on coal. Slovakia and Hungary still look heavily to Russian gas.
While some look to phase out nuclear power, others are looking increasingly towards it. Out on its own at the edge of Europe, Ireland is aiming to boost its infrastructure with the new Celtic interconnector to France.
And when it comes to targets, officials say European countries are falling short in many areas of what they have signed up to.
“It doesn’t matter how good any legislation is if it’s not implemented,” one commission official said this week.
“On renewable targets, we’ve issued formal notice to 26 member states in July (including Ireland) over failing to notify us on directives around renewable energy in all sectors of the economy.
“There’s a limited ambition gap, in terms of what member states have put forward. We need to stay on track and continue on the course.”
Ireland is certainly one of the countries that must up its game.
In Eurostat figures covering the 10 years from 2013 to 2022, Ireland was just among a handful of EU countries that increased its emissions in this time.
Similarly, Ireland’s overall share of energy coming from renewable sources in 2023 was the fourth worst in the EU. This improved in 2024, but more is needed to meet the targets set out by the EU for 2030 and beyond.
Officials say meeting these targets is not just an abstract concept or an arbitrary goal. Achieving them can make a big difference to energy security and affordability.
One European Commission official even singled out Ireland during a discussion on data centre and the bloc’s energy efficiency directive this week.
“We say ‘there’s a major problem there, how are you dealing with that, are you trying to reduce data consumption, or implement minimum performance requirements’,” the official said, adding that incentives must be given to take the right action amid congestion and struggles on the grid.
In terms of the energy efficiency directive, the European Commission has said it wants energy consumption to go down in absolute terms rather than as a proportion of a country’s GDP, which the official said Ireland had been critical of. It is worth noting here that it comes at a time when Ireland’s economy is rising at among the fastest rate in Europe.
“Ireland has said ‘we expect population growth, we want to produce hydrogen, we have data centres during an AI boom’,” he said.
“My personal feeling is going forward, when we revise the directive in five years’ time, we will not be able to get away with an absolute target again.”
On data centres, Ireland is among the few countries in Europe with a large concentration of them. They already guzzle up more electricity than all urban homes in the country.
The Government has signalled its support for them as crucial to the economy, but will soon face obligations to adhere to European regulations aimed at making the information about their operation across the bloc more transparent.
In a recent EU report on the sustainability of data centres, Ireland faced criticism as it “struggled to implement the necessary systems” to capture data on them effectively. A second report due in October is expected to provide a more detailed picture on the sector in Ireland.
The European Commission plans to bring in a publicly available database setting out key information on data centres across the continent, with member states obliged to capture and supply this information.
Furthermore, it plans to develop a rating system to rank the sustainability of data centres similar to how homes in Ireland have a BER rating.
Ireland's solution to sky high energy bills, at least in the short term during the crisis, has been to give every household money off their electricity. In recent weeks, ministers such as Simon Harris have admitted keeping the likes of these supports indefinitely is “not a good way to run a country”.
In the long term, fundamental changes to how much energy we consume and where we source it from, can be the more sustainable way to bring down energy bills.
The work that began to accelerate under the last government in a range of areas continues, including in the retrofitting of homes and renewable energy.
Earlier this week, energy minister Darragh O’Brien announced a slew of new solar, wind, and other projects under the fifth renewable electricity support scheme that he said had secured enough energy capacity to power 357,000 homes.
“The deployment and connection of wind and solar energy generation at pace and at scale to our electricity grid benefits households and businesses by shielding them from volatile fossil fuel imports using our indigenous natural energy resources,” he said.
Under government schemes to end of 2024, 186,000 homes had benefitted from home energy upgrade supports. The 53,984 homes retrofitted via State support in 2024 was an increase of 13% on the previous year.
New legislation planned will pave the way for district heating in Ireland — where multiple buildings can be warmed through one hub — and the Government is also plotting its own new energy affordability action plan on the back of Europe’s. However, this work isn’t fixing all the issues we’re facing.
On top of companies hiking their prices, households face more money being added to their bills this winter due to the regulator ordering further increases to electricity network charges that will see an average of €29 added to a customer’s bill if the energy firm passes it on as expected.
It follows a hike of just over €100 to network charges last year, with further rises expected in the coming years to fund upgrades and maintenance to the electricity grid.
“Investments planned for 2026 will further strengthen the network’s ability to meet growing demand efficiently,” the Commission for Regulation of Utilities said.
At an Oireachtas committee, the ESB has itself admitted problems with the grid that are affecting homes being connected, demonstrating how vital it is we get the grid into the shape needed for the future.
While highlighting Ireland for a 7% fall in electricity emissions between 2023 and 2024, the Climate Change Advisory Council has been pessimistic on Ireland’s current prospects.
“Renewable energy is still not being rolled out fast enough, and insufficient investment in the electricity grid means that some of the renewable energy we currently generate cannot be used,” the council said.
It has called for urgent action to improve Ireland’s energy resilience, ease planning issues, and reduce costs for consumers through regulatory changes.
It added: “The council expresses its deep disappointment at Ireland’s failure to transpose the recast Energy Efficiency Directive on time, including the failure to establish a publicly accessible reporting mechanism on the sustainability of data centres operating in Ireland.”
The European Commission's ambitions to make us all more energy efficient, sustainable, and independent are laudable. It sets demands on its members, including Ireland, to take action and take action now.
In the long term, its myriad of plans could well bring our bills down substantially and prevent a lurch from crisis to crisis.
However, we’re a long way away from that at the minute. More work has to be done in Brussels, but then also replicated in Dublin. And Paris. And Copenhagen. And so on.
Some of the others have a big head start on Ireland. On the grid, on renewable energy sources, on retrofitting — and despite the significant investment that will be needed — we cannot afford to lose any momentum.
If we don’t, in the long term, it’ll be households who foot the bill. Again.
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