Irish households could be in line for lower energy bills later this year, as wholesale gas prices continue to fall.
A combination of declining wholesale gas costs, strong supplies of liquefied natural gas (LNG) and a relatively mild winter across Europe has created the conditions for potential cuts to domestic electricity and gas prices in Ireland. However, analysts have warned that any reductions would take time to reach consumers.
Despite some recent easing in global markets, Irish households are still paying some of the highest energy costs in Europe. An analysis from the Nevin Economic Research Institute found that Irish homes pay around €360 more per year for electricity than the average household across western EU states. No Government energy credits have been paid to households so far this year.
Daragh Cassidy of price comparison website Bonkers.ie said wholesale gas prices have been falling steadily over recent months, with the latest figures showing they are 37 per cent lower than a year ago. Gas remains a crucial part of Ireland’s energy system, generating up to half of the country’s electricity, meaning changes in wholesale gas prices have a major impact on household bills.
Mr Cassidy said the recent fall in prices has been driven by strong LNG supplies into Europe, combined with optimism around the possibility of a peace deal in Ukraine and a relatively mild winter up to Christmas. However, he stressed that movements in the wholesale market do not immediately translate into cheaper bills for consumers.
Wholesale gas prices are only one part of the overall cost of supplying energy to homes and businesses. Network charges, supplier margins and Government costs such as VAT and the carbon tax also play a significant role in determining what households ultimately pay.
Mr Cassidy said that if wholesale prices remain close to current levels, it should give suppliers scope to reduce gas prices over the coming months. However, he warned that prices remain 60 to 70 per cent higher than they were before Russia’s invasion of Ukraine and are unlikely to return to pre-war levels any time soon.
Despite this, he said Irish households are still paying around double what they did a few years ago, meaning some level of relief could be expected if market conditions remain stable.
Dr Paul Deane, an energy lecturer at University College Cork, stated that wholesale gas prices are currently stable, creating the possibility of modest price cuts. At the very least, he said, this stability should prevent further increases in household energy bills this year.
However, Dr Deane said suppliers do not base their pricing on short-term changes in the wholesale market. Instead, they look at average prices over a rolling 12- to 18-month period, which means any reductions would be gradual rather than immediate.
“Knowing what we know, the outlook is looking good, but things can change,” he said, adding that while prices are unlikely to fall dramatically, there is potential for a small reduction.
The Nevin Economic Research Institute said energy prices in Ireland have diverged sharply from other consumer costs over the past decade, leaving Irish households paying significantly more than their western European counterparts. The think-tank described Ireland as a major “cost growth outlier” among the EU’s original 15 member states.
For now, falling wholesale gas prices have provided cautious optimism — but households may have to wait several months before seeing any real impact on their bills.
