Electricity prices to rise during transition to low carbon, regulator says

Grid will continue to need natural gas to secure electricity supply, CRU says

Electricity prices will increase as the Republic bids to cut greenhouse gas emissions, regulators told politicians on Tuesday.

The news comes days after ESB subsidiary Electric Ireland announced a price hike likely to add €8.50 a month to the average household bill.

Overall electricity prices "will increase during the transition" to a low-carbon energy system, Aoife MacEvilly, chairwoman of the Commission for Regulation of Utilities (CRU), confirmed to Oireachtas members.

She told the Joint Committee on Environment and Climate Action that customers themselves would have opportunities to use technology including smart meters to cut electricity consumption.

Electricity suppliers in the Republic have been increasing prices since March as wholesale charges rose on the back of increased demand and rising oil costs.

National grid operator EirGrid and ESB Networks will spend up to €4 billion over the next five years to redevelop the electricity transmission system to take on more renewable power, according to Ms MacEvilly.

“There is a recognition that more investment will be required in the second half of the decade,” she added.

Data centres

Responding to fears that households are subsidising data centres through the public-service levy on electricity that subsidises green energy, Ms MacEvilly explained that the Oireachtas would have to change the law in order to alter how the charge is calculated.

The CRU will finish a consultation on data centres on Wednesday. The growing number of these facilities, which consume large quantities of energy, is putting pressure on electricity supplies.

CRU commissioner Jim Gannon explained that the regulator is considering a grading system that will favour data centres with their own back-up power supply for connection over others.

The CRU witnesses told the committee that the Irish electricity system would continue to need natural gas to guarantee security of supplies, even as it boosts the amount of wind and other renewable sources that it uses.

Ms MacEvilly warned that the fuel was essential to future security of supply. The Republic will have to build new gas-fired electricity generators to support renewables, she noted.

LNG

The CRU counselled that policy makers needed to consider all sources of the fuel, including the emerging use of green hydrogen, biogas and liquid natural gas (LNG).

US group Fortress Energy recently reapplied to An Bord Pleanála for permission to build an LNG plant on the Shannon estuary.

Commissioner Paul McGowan said it was not helpful to link gas produced by fracking, a controversial drilling method opposed by environmentalists, with LNG.

Some of the gas imported by LNG terminals around the world is fracked, but conventional drilling accounts for large quantities of the liquefied fuel processed in these plants.

“We need to take the idea of fracked gas and separate it completely from LNG,” Mr McGowan said.

He added that LNG should be considered as a possible source of diversity of supply, along with all others.

The Minister for Energy, Eamon Ryan, recently said it would not be appropriate for any LNG project to proceed in the Republic before a Government review of security of supply is complete.

The Attorney General has advised the Government that European Union law bars the Republic from banning fracked gas imports.

Meanwhile, Mr Gannon suggested that two power plants, in Huntstown, Co Dublin, and Whitegate, Co Cork, which have been undergoing maintenance for several months, could be back generating next winter.

The pair generate a total of 800 megawatt hours of electricity at full capacity, about 10 per cent of the Republic’s permanent power supply.

Their temporary shutdown contributed to a squeeze on electricity supplies last winter.