Irish electricity prices are dramatically outpacing both inflation and costs faced by customers in western European Union countries, with households paying approximately €360 more per year than the western EU average, according to new research from the Nevin Economic Research Institute.
The analysis reveals that power prices have undergone a “massive divergence” from other consumer costs over the past decade. NERI, a think tank backed by the Irish Congress of Trade Unions, identifies Ireland as a significant “cost growth outlier” among the 15 mainly western EU states that were members before the bloc’s 2004 expansion.
The pressure extends beyond households to industry. In the first half of 2025, pre-VAT electricity prices for large-scale industrial users (consuming 150,000 MWh and above) in Ireland were 80.4% higher than the Euro area average, creating competitive disadvantages for Irish manufacturers and businesses.
While many EU states experienced rapid price declines after the 2022 peak caused by Russia’s invasion of Ukraine, Irish prices did not fall to the same degree. “While global energy shocks affected all of Europe, particularly at the end of 2022, Irish prices have not fallen back to the same degree as our counterparts since then,” said research author Paul Goldrick-Kelly.
The research, titled “Ireland’s Electricity Prices Over Time,” shows that between January 1996 and September 2025, Irish electricity prices increased fourfold, more than double the increase in general consumer price inflation during the same period. This divergence highlights electricity as an exceptional cost driver in the Irish economy.
NERI argues that a primary driver of these elevated costs is the outsized role natural gas plays in the Irish electricity system. The market is currently designed to create a close link between wholesale electricity costs and natural gas prices, leaving Ireland particularly vulnerable to global gas market volatility compared to countries with more diversified energy generation portfolios.
Several factors explain why Ireland faces higher electricity costs. Geographic isolation on the edge of the EU bloc increases costs, as does Ireland’s more decentralized and dispersed population compared to other European states, which requires more extensive distribution infrastructure per capita.
The report also points to a pattern of limited investment in Irish network infrastructure. The energy regulator highlighted “historic underinvestment” in the sector as far back as 2005, and this underinvestment “remains an issue,” according to the report. Years of insufficient infrastructure spending have left Ireland playing catch-up while simultaneously managing rapid demand growth.
Goldrick-Kelly noted it was “worth thinking about how we set prices,” pointing to the rapid growth in electricity costs during the Celtic Tiger period when underlying infrastructure needs were not adequately addressed despite economic prosperity.
Key findings from the report include: Irish household electricity prices by late 2025 were 4.02 times their January 1996 levels, while no other EU15 state exceeded increases of three times their base. While general Irish prices rose approximately 79.9% since 1996, electricity prices increased by over 300% in the same timeframe. Ireland moved from having some of the cheapest electricity in the EU15 in 1990 to being one of the most expensive for nearly all domestic consumption bands by early 2025.
The report recommends reducing the role of natural gas on the Irish grid to help bring down electricity costs. It also suggests research into whether the government could bring natural gas generation into a strategic reserve to meet demand when needed, such as during periods of excess demand or cold weather when renewable generation may be insufficient.
Goldrick-Kelly explained such a model could allow natural gas to be deployed “at those moments where we need it, where there’s excess demand, or if there’s a cold day,” rather than being the default baseload generation source that sets wholesale prices.
“In its current formulation, the Irish energy system is set up to fail Irish households,” Goldrick-Kelly stated. “Policy must address our heavy reliance on natural gas and reconsider market design that closely links wholesale electricity costs to gas prices.”
The findings raise urgent questions about Ireland’s energy policy and whether the current market structure serves consumer interests, particularly as the country pursues ambitious renewable energy targets while maintaining one of Europe’s highest electricity price regimes.