Paul O'Donoghue

WHILE CLOSE TO the top, Ireland is not an outright leader in many areas.

We’re beaten out by the Nordics on quality of life measures, such as education and happiness. While we rank well for business competitiveness, we’re not quite as cut-throat as Singapore or Hong Kong. And for football… well, we won’t dwell on that.

But one area where Ireland apparently leads the way is in electricity costs. Aontú leader Peadar Tóibín said during the week that a new Commission for Regulation of Utilities (CRU) levy, which kicks in this month, will make electricity in Ireland more expensive than Bermuda.

There is likely room for interpretation here whether Ireland is just above or just below the British Overseas Territory.

But at the very least, our household electricity prices are the highest in the EU, meaning that the average home in Ireland pays about €480 a year more for electricity compared to our compatriots across the bloc.

The high prices have led to many, many calls for the government to do something about them. Indeed, that was the point of Tóibín’s claim, as he called for political leaders to “reduce the burden for people”.

It is an understandable and even reasonable request. After all, about 14% of households can’t afford to properly heat their homes, while over 30% at least struggle with affordability.

It’s estimated that the number of cold-related deaths in Ireland could more than double in the coming years due to climate change, making energy poverty a very real, serious health risk.

Which brings us to what the government can do about it. The most obvious recent measure was the universal electricity credits of €125 paid out to every household account in the country in 2024 and 2025. The move was scrapped in Budget 2026, with criticism from the likes of the Economic and Social Research Institute (ESRI) that it was a bad policy for being universal, rather than targeted at genuinely struggling households.

It cost about €550 million per year, whereas the think tank said it could have been closer to €380 million if better targeted.

However, some have suggested going even further. Earlier this year People Before Profit floated the idea of an electricity price cap. It proposed capping electricity prices at 25 cent per unit and gas at eight cent per unit, while abolishing standing charges. This is well below the current market prices in Ireland, which are somewhere around 40 cents per unit for electricity. So funding the price cap would cost a lot of money.

The party asked the Parliamentary Budget Office (PBO) to get a realistic costing of how much.

The estimate has now come back. The verdict? The move would be incredibly expensive.

It is worth noting that the analysis assumes that the State would compensate suppliers for the difference between the market price and the capped price for both electricity units and household standing charges.

Say a household uses one unit of electricity which has a market price of 40 cents. If the price cap is 25 cents, the household pays the first 25 cents, and the state pays the energy company the remaining 15 cents.

Without further ado, the PBO estimates that this measure would cost the state €2.65 billion per year. To give some context for how much money that is – it is about the same as Ireland’s entire social housing budget for 2026, which is estimated to translate into more than 10,000 new homes.

That figure of €2.65 billion is if the price cap is completely universal, also covering businesses. If it was applied just to residential households, it would cost the state an estimated €1.45 billion per year.

Again, still an enormous amount of money. And also one which could rise further in the future, if the price cap was maintained at 25 cents and electricity prices go up further, the expense to the state would rise even higher.

Of course, a price cap could be funded a few ways, not just by the state. People Before Profit politicians have said that many energy companies are making substantial profits, which could be used to fund a price cap.

Paul Murphy has previously pointed to state-owned ESB Group. The company recorded a profit after tax of more than €600 million for 2025, although this is for the entire group (also including multiple other activities).

If we narrow our focus a bit and look purely at electricity suppliers, the profits don’t tend to be as high.

For example, the retail arm of Energia made pre-tax profits of €81.5 million (down 47% year-on-year) on revenues of €1.5 billion in 2025. Not exactly massive profiteering.

More recently, People Before Profit has suggested a €500 energy credit which could be partly funded by data centre providers. The party estimates that a new charge on these businesses could raise €1.5 billion per year, which would go a long way to paying energy credits to households.

There is also logic to targeting data centre companies, as recent research from environmental groups suggested that these facilities may have pushed up electricity costs for Irish households by an average of €360 per year.

But several analysts have pointed out that both price caps and energy credits have a similar problem. They are just helping citizens pay out high prices charged for electricity, rather than doing something to actually reduce costs.

A recent proposal from the Green Party focuses more on the latter. The party has also suggested taxing data centres. But it envisages the money raised from this being used to upgrade the national grid, rather than handed directly to households.

The ultimate aim would be to move onto renewable electricity, which the Green Party says would ultimately be cheaper than electricity generated from fossil fuels.

While it has merits, it isn’t clear how long it would take for this positive impact on prices to filter through to the ordinary consumer.

In the meantime, the government has ruled out energy price caps, calling them ‘too crude’. The idea is that this is because the state would end up spending lots of money funding a cap for many users who don’t need it. Similar to the ESRI’s criticism about the electricity credits, but on an even bigger scale.

Based on the PBO’s estimate, it looks to be correct that a price cap would probably be too expensive. At least, at a level of 25 cents per unit. A better focus could be on measures to actually reduce prices, rather than subsidising them at their current level. Of course, easier said than done.