*Ireland’s dwindling price competitiveness is perhaps the biggest challenge facing the economy. High prices underpin a myriad of problems.
They drive high construction costs and high house prices and rents as a result. They also drive the high cost of doing business here and the high spate of insolvencies in the hospitality sector which the Government is now trying to temper with a reduced rate of VAT (a move is expected in next week’s budget). If headline inflation has dropped to 2 per cent, grocery price inflation remains elevated at 5 per cent and represents perhaps the chief strain on household budgets.
There are perhaps several reasons for Ireland’s high-cost economy, but high energy costs is a big one. Because Ireland imports most of its energy requirements, the State is a price taker and therefore subject to the pitfalls of international energy markets – as the recent energy price shock illustrated.
Eurostat figures show prices here are the third highest across the EU, almost 30 per cent more than the EU-27 average.
Until we transition to home-grown renewables – wind, offshore wind, solar – we will remain a high energy cost country and at the mercy of supply from elsewhere.
Gas Networks Ireland’s latest energy mix data show coal fully exited the State’s energy base in August following the closure of Moneypoint’s coal-fired operations in June.
But without coal in the mix, gas is playing a greater role in ensuring security of supply, the company said.
Gas, the lion’s share of which is imported at elevated prices, generated 45 per cent of Ireland’s electricity in August, a year-on-year increase of nine percentage points from 36 per cent in August 2024.
[ Ireland at risk of major power outages in absence of natural gas storage, EY saysOpens in new window ]
At times, gas’s contribution peaked at 90 per cent and never fell below 13 per cent, “providing critical stability when renewable output dipped” it said. Wind supplied 27 per cent of electricity, down eight percentage points on last year from 35 per cent.
*While moving in the way of renewables, these metrics reveal the slow pace of transition (Denmark now generates over half of its electricity from wind) and unfortunately the likelihood of energy prices here remaining elevated for the time being.
*This article was edited on Wednesday, October 1st, 2025 to correct the wind input to electricity generation in Denmark
