Cost of supplying Irish electricity ‘wildly out of line’ with Europe

The cost of supplying electricity to Irish homes is “wildly out of line” with the rest of Europe, and the temporary VAT reduction fails to address the underlying causes of high costs, the Irish Solar Energy Association (ISEA) has said.

ISEA, which was established in 2013 to advance a policy and regulatory landscape promoting solar as a leading renewable energy technology, said “network charges” are being “ignored” to the detriment of consumers.

The group defined network charges as “the cost of transporting electricity from the generator to the home”.

“Network charges are entirely within Irish control,” said ISEA chief executive Conall Bolger. “The wholesale prices electricity suppliers must pay have multiplied and this is of course impacting costs, but there is more to electricity costs than just VAT.

“Irish people are paying among the highest rates for electricity in Europe. We must be realistic and recognise that there are domestic factors influencing costs too and these are not being addressed.

“Politically, too much attention has been focused on the areas of VAT and the PSO levy, which are distractions.

“In more normal times, for every €1 spent by a household on VAT and the PSO levy, they spend almost €2 on the cost of transporting the electricity from the generator to their home, on what are known as network charges.”

ISEA said the network charges were domestic regulated costs. “They are set by a State entity, the Commission for the Regulation of Utilities, and crucially they are wildly out of line with the rest of Europe.”

In terms of renewable energy, Mr Bolger said Ireland was paying €73 for every unit of solar power, while Spain was paying just €32.

“An Irish solar operator could be paying an inexplicable €26 in network related charges for every unit they put on the grid, contributing to this significant difference,” he said.

“Renewable energy that is domestically generated lessens our exposure to international prices. However, these inexplicable network charges ensure that Irish people continue to pay far too much for renewable energy than ought to be the case.”

He added that the issue of network charges may not be “headline grabbing” for the Government, but that a review could be “hugely impactful” for consumers.

“The VAT reduction ultimately does nothing to address the reasons behind high electricity prices,” he said. “This comes hot off the heels of another piecemeal measure, the once-off credit on electricity bills. Neither will impact on the factors driving up prices.”