Irish electricity market loses first victim to price surge

Light goes out for fledgling supplier Bright Energy

The ongoing energy crisis has claimed its first victim in the Irish market. Bright Energy, a small scale player, formally pulled the plug on Wednesday, handing over its remaining 1,500 or so customers in the Republic to the supplier of last resort, Electric Ireland.

Bright Energy was a small all-Ireland player. Founded only in 2020, as a joint venture between Maxol and Evermore Energy, run by brothers Ciaran and Stephen Devine, it had about 7,000 retail customers in the Republic at peak though most had transferred before it shut down. It had already closed its Northern Ireland business.

It was undone by a 470 per cent surge in wholesale gas prices in Europe last year.

At the end of 2021, price comparison website Bonkers noted that there had been 35 separate price increases announced by the relatively small number of players in the Irish market. Some companies increased prices five times last year.

But Irish customers have fared better than their counterparts in the UK where more than two million households have been hit as 22 separate suppliers walked away from the market and another one was put into special administration and is now run by the state. Many more are facing a similar prospect this year.

And, as the IMF signalled this week, more increases are expected this year.

Perfect storm

Several factors have come together to create a perfect storm. An unusually calm 2021 that saw the contribution of wind power to the networks dry up after a cold winter last year has diminished stored supplies. Efforts to build them up again have been hindered by two factors.

First, post-Covid, demand for gas has risen sharply, especially in Asian economies. In addition, critically, Russia, which is a major supplier for the European markets, has been playing politics with deliveries as it looks to strong-arm approval for its Nord Stream 2 pipeline that would replace current transport routes through Ukraine.

And it could yet get worse. The ongoing threat of a Russian invasion of Ukraine is only exacerbating the issue. If it happens, it is likely to further disrupt supplies and push prices higher again.

Bright Energy might be the first to surrender but if there is no end to gas market volatility, it might not be the last.