Onshore wind to keep Irish power prices low for five years, says Moody’s

Subdued prices to come despite growth in demand, especially from data centres

Wholesale power prices in the Republic will stay at relatively low levels for the next five years even though demand will increase, ratings agency Moody’s has said.

The ratings agency said the main factor likely to subdue prices is the expectation that wind capacity in Ireland will grow by 340 megawatts per year until 2020.

In an Irish-specific report as part of a series on Europe’s electricity market, Moody’s said power prices would vary between €43 to €48 per megawatt hour over the five years. This would be relatively low in the context of recent years, with prices edging above €90 per megawatt hour in 2013. At the start of this year, prices pushed past the €60 mark, but Moody’s attributed that to a period of higher demand from the UK.

Data centres

Low prices "will reflect the continued growth of onshore wind power, although this will be partly offset by growth in domestic demand of around 2 per cent each year, a gradual increase in gas and CO2 prices and continued demand from Great Britain for energy generated in Ireland through subsea cables," Alastair Sullivan, Moody's assistant vice-president, said.

One area of significant domestic demand is in the data centre sector. Moody’s believes the total capacity requirement for data centres could reach 1,200 megawatts by 2022. Currently, data centres connected to the grid generate demand of up to 250 megawatts.

The analysis does not foresee Brexit having a “major impact” on power prices because of the integrated single electricity market framework, which is designed to enable the “free flow” of energy across borders.