Energy Prices
100. Deputy Pa Daly asked the Minister for Climate, Energy and the Environment the measures he is taking to enhance the power of the regulator to increase transparency in relation to the retail price of energy here; the steps he is taking to investigate and prevent price gouging, as the Taoiseach alleged is taking place (details supplied); and if he will make a statement on the matter. [72871/25]
101. Deputy Jennifer Whitmore asked the Minister for Climate, Energy and the Environment if he will direct the CRU to launch an investigation into price gouging by energy retailers; and if he will make a statement on the matter. [71566/25]
Before we start, it is no disrespect to the Ministers of State but is the senior Minister ever going to turn up? I presume there is a good reason for his absence.
My understanding is that he has been away all week in Strasbourg. He has been involved in issues relating to the Irish Presidency.
Tá sé tuirseach traochta.
He feels he is well covered by the presence of two Ministers of State to represent him. I hope the Deputy will understand and appreciate this. We will bring back the Deputy's good wishes and concern for him.
There seems to be a pattern but anyway.
Irish households are being ripped off in their energy bills. Even the Taoiseach has acknowledged it. Last week at the joint committee, we were told that price gouging cannot be ruled out.
The ESRI called for a fresh inquiry into our sky-high energy prices. We introduced legislation a few years ago to stop this, but we were ignored, and since then there are record numbers in arrears, price hikes across the board and vital supports such as energy credits withdrawn and ripped away. If even the Government is admitting that price gouging is taking place, why not do something about it, and stop the profiteering before taking away all the energy credits?
I propose to take Questions Nos. 100 and 101 together.
I know Deputy Daly is interested in this matter. He has raised it in the House on a few occasions, so he has a good track record on it. As he is aware, the electricity and gas retail markets in Ireland operate within an EU regulatory regime wherein these markets are commercial and liberalised. The Commission for Regulation of Utilities, CRU, ended its regulation of retail prices in the electricity market in 2011, and in the gas market in 2014. Price setting by electricity suppliers is, therefore, a commercial matter for the companies concerned. Obviously the CRU remains vigilant and observant of how the market works. Retail prices are influenced by several factors, including wholesale energy prices, system operation costs and supplier hedging. The latest data from Eurostat show that, in nominal terms, Ireland ranked fifth for electricity prices and eighth for household gas prices among European countries in the first half of 2025. When adjusting for purchasing power parity, Ireland is mid-table in terms of energy affordability, with the 12th highest electricity and gas prices among European countries.
Regarding hedging, suppliers in Ireland were shown to have taken a prudent approach to hedging, which had the benefit of protecting final customers from the worst effects of the wholesale price crisis. Conversely, hedging limits the ability of suppliers to reduce prices immediately in line with wholesale price shifts. We saw at the time of the Putin invasion of Ukraine that the gas markets had very significant spikes in wholesale prices, yet our energy users here did not see those spikes in cost because of hedging. Of course, when prices on the markets come down, we do not see the consequential reduction as quickly. The International Energy Agency, IEA, has observed that Irish retail prices have not adjusted at a comparable pace to the decline in wholesale prices, with the energy component of retail prices remaining up to three times that of the wholesale price. Again, that can be factored, to some extent, by the hedging position of the companies concerned.
While the CRU has found no evidence of market failure or windfall profits in the retail sector in its market monitoring role, the IEA findings underline the importance of progressing the programme for Government commitment to "commission an independent review into the speed and level of passthrough from wholesale prices to retail prices". The Minister, Deputy O'Brien, is on public record about this but, if not, we will put it on the record now. He has written to the CRU to request that it commences this independent review, building on the work of previous CRU investigations by reviewing the competitiveness of Irish retail energy markets, examining supplier costs, including hedging and pricing practices, and providing comparative price analysis with other EU member states. That body of work was identified as part of the programme for Government and the CRU has now been tasked by the Minister to carry out the work. From an Irish perspective, that will give some level of insight into whether there are practices that could be defined as the Deputy mentioned. It will also assess whether measures are warranted to enhance market responsiveness to wholesale price changes, and make recommendations to ensure that the benefits of lower wholesale prices are felt by consumers. This report will inform the work of the national energy affordability task force.
In addition, the Department is transposing the new electricity market design directive 2024. This directive requires regulators to ensure that suppliers implement appropriate hedging strategies to reduce the risk of supply failure.
I thank the Minister of State for the reply. I agree to some extent with him that it is a commercial issue. Obviously all the energy companies have a responsibility to their shareholders not only to have the same amount of profit but to have an increased amount the following year and the year after that.
I agree with the Minister of State that hedging is an issue. The Government can see that prices do not come down as quickly as they go up. He said that energy costs in Ireland are the 12th highest in Europe, but when other factors are stripped away we have some of the highest prices in Europe. As the Minister of State knows, household bills have doubled over the last five years. Nearly €2,000 extra is now paid by households compared to five years ago. These prices are not inevitable. They are not normal. Ireland is an outlier in this. The latest report from the International Energy Agency highlighted the gap between Ireland's wholesale prices and retail prices as being the largest in the world. We are paying a price for energy that is three times what it costs to produce. What is the Minister of State going to do to address it?
As we said, it is of very serious concern to the Government that the energy component of retail prices in Ireland is significantly above the wholesale cost. The IEA renewables report notes that the gap is widening across the countries studied since the start of the energy crisis. Of course that is concerning. The gap is particularly large in Ireland with the energy component of retail prices up to three times that of the wholesale cost. The CRU has carried out extensive monitoring of the Irish retail energy market in recent years and has found no evidence of market failure. Market failure is one thing, yet there is obviously something that is distorting that. That is why the Minister has asked the CRU to carry out that investigation which was identified and factored into the programme for Government. I am hopeful that when that piece of work is done it will shine a light on the issue. It may not be a case of market failure but perhaps there is a lack of competition; I do not know. It is worrying that the gap is widening and it clearly requires a thorough analysis of the facts to establish what exactly is happening. Then it is a matter of an appropriate Government response within the confines of the free market that exists and how the Government might be able to act to ensure domestic and business consumers are able to purchase energy at rates that are comparable. At the end of the day, it puts pressure on every aspect of society if the energy market is not functioning to the extent that we want. It hits us from a competitiveness point of view. If the Deputy has had an opportunity to read the Draghi report, he will know it is about competitiveness in terms of where we are at both a European and a domestic level.
It certainly is not market failure for the energy companies because they are making huge profits. We have called since 2023 for a dedicated hedging monitoring unit so that the regulator can oversee and regulate hedging because the energy companies need to be held to account and to justify the increase in prices. The regulator must also treat energy as a public good. In the coming months, we are going to see an extra €1 tacked onto bills to invest in the grid. Price review 6 also has worrying price increases coming down the tracks. There will be more price increases for the renewable heat obligation, as well as the carbon tax, which the Minister of State's colleagues and supporters in government, the Healy-Rae brothers, opposed vehemently while in opposition, and now are flag bearers for the carbon tax since the last budget. What is the Minister of State going to do to protect households from the rising costs and to address the unfairness in how the costs are structured and levied?
The old adage of all politics being local is alive and well for the Christmas season in Kerry. The Government understands the importance of a functioning energy market. It is the role of the CRU to manage that. The Minister has sought that piece of work to be done and it will inform any decisions that have to be taken thereafter.
It is easy to say - although I am not accusing Deputy Daly alone of this - that we are heaping on additional charges for no reason. The carbon tax or carbon charge, from the time it was introduced, was a very clear indication by Government of the direction of travel for fossil fuels. It was about encouraging societies to move away the harmful impacts of fossil fuels. It gave certainty to the market place that if energy users continued to use fossil fuels as they were, the charges would increase over time. What I was clear on, from the perspective of the Opposition at the time, was that the Government would put in place a methodology to ensure that the taxes or charges collected would be ringfenced and used for what was referred to as a hypothecation fund. The funds would be used to assist those in greatest need and those who were challenged by the tax.
That is not what happened.
I know some Deputies will have a different view but that is very much what has happened with that funding. It was not about raising a tax or an additional charge for the sake of it. It was about attempting to change behaviour and then utilising the moneys collected to assist those facing challenges in moving away from fossil fuels. That is working, of that there is no doubt.
No, it is not.
Deputy Daly talked about the additional charge under PR6 that will go into upgrading the grid. That is really important. That work has to be done. We have significant constraints on our electricity grid at the moment that need to be addressed. Unfortunately, that has to be paid for and that is why the CRU monitors all of these charges. Companies do not have a free-for-all in terms of what they charge. It is monitored by the CRU and is provided for in PR6.
Energy Policy
102. Deputy Pa Daly asked the Minister for Climate, Energy and the Environment if he will report on the commitment in the programme for Government to “explore if legislation could be enacted to divert surplus renewable energy, that would otherwise be wasted, to homes in fuel poverty”; the progress that has been made on this; and if he will make a statement on the matter. [72872/25]
Ireland is wasting over €400 million every year on surplus energy. The programme for Government says that legislation could be enacted to divert surplus renewable energy to homes that are in fuel poverty. The amount being wasted has jumped from over €250 million in 2023. I ask the Minister of State to outline a timeline for the delivery of the diversion of wasted energy to the households that need it the most.
As the Deputy knows, imperfections and dispatch down are a major challenge facing the electricity system. Obviously, dispatch down is brought about by constraints on the grid and the challenges of getting the electricity from the point of generation to where there is a demand and a need. If the grid is not capable of carrying the electricity at a particular time, energy generators are required to effectively stop generating so that there is not more complexity on the grid. This complex issue can only be addressed by taking a systematic and multifaceted approach, requiring investment in grid, storage and demand flexibility. We are already taking steps to invest in this critical energy infrastructure and, for example, PR6 will enable the delivery of over 500 capital network projects supporting the integration of increasing volumes of renewable energy and helping to reduce the amount of wasted energy in the first instance.
In July the Government committed to investing €3.5 billion of national development plan, NDP, funding in EirGrid and ESB Networks in order to ensure that the PR6 infrastructure programme can be delivered. That level of investment by the State in ESB Networks and EirGrid provides those companies with capacity to leverage against significant further borrowing that will ensure we will see a very significant upgrade of our networks. Legislation providing the legal mechanism necessary for the investment of €1.5 billion of this funding into ESB Networks has now passed all Stages and was signed into law by the President last month. Further legislation in relation to the investment in EirGrid will be progressed next year.
Last year the Department published the electricity storage policy framework for Ireland which supported the procurement of 500 MW of demand flexibility products by ESB Networks and 500 MW of long-duration electricity storage by EirGrid to meet specific network needs. Work is already under way to ensure the timely delivery of those projects.
I thank the Minister of State for the reply. As I said earlier, the figure for wasted energy was €250 million in 2023 but it is now almost half a billion euro. At the same time, hundreds of thousands of households are in debt and energy poverty has reached record levels. Approximately €1.3 million worth of energy has gone down the drain today. This would have heated 390 million water tanks but that 1.2 GW of power was lost forever. EnergyCloud has a model to divert this waste into a public good. It has a concept and case studies show that it would make a real difference to people's lives. The Government is making a political choice not to pursue this model. The Minister, nuair a thagainn sé ar ais, should at least acknowledge that the Government supports EnergyCloud. Then the necessary data can be prepared over the next six months in order to make progress and hit the ground running.
As the Deputy knows, the generation of electricity is one thing but the transmission of it is another. Oftentimes electricity is generated at locations where there is not demand for it and it has to be transmitted through the various different networks that exist. It is not as simple as taking it from one location to another because of the constraints that I talked about earlier. Of course, officials in the Department and the SEAI have met with representatives of EnergyCloud on a number of occasions. As I understand it, the approach taken to date by EnergyCloud has been to focus on approved housing body, AHB, and local authority homes. This has had the benefit of facilitating an aggregated and area-based approach. This is not something that can just be done in isolation.
The national energy affordability task force, following the publication of its first report, is now entering a new phase in its work. The task force is examining a range of matters, including the programme for Government commitment to explore whether legislation could be enacted to divert surplus renewable energy, that would otherwise be wasted, to homes in fuel poverty.
The reality is that there are difficulties with our grid, which is very constrained. Investment in the grid must take place, which the Minister of State mentioned in response to the previous question. However, the cost of that should not be borne by ordinary householders but by the State and by larger energy consumers. A big part of the problem is that data centres are taking up almost one third of Ireland's energy. The surge in energy demand from data centres has already led to housing not being delivered. One such example was in Portlaoise, where multiple families were told they could not move into their homes because an energy connection simply was not available. Similarly, investments that were intended for housing have, instead, been diverted to data centres because there is a first-come, first-served approach. That has to change. The energy regulator must be given the power to deal with that and to prioritise major grid infrastructure for major housing developments as opposed to giving all of our extra renewable energy directly to data centres. Will the Government commit today to moving away from the first-come, first-served model for grid connections and ensure that they are prioritised on a need basis?
I will be answering a question from Deputy Paul Murphy shortly on data centres but suffice to say that in the view of the Government data centres are a really important component of our growing economy and of the future in relation to the technological investment that we get here. Ireland has always been attractive to foreign direct investment which has been a bedrock of our industrial, economic and employment policy. There is little doubt that in recent years the focus has shifted from the pharmaceutical and medtech sectors, although both are still really fundamental drivers of our economy, and a new wave of investment is coming in data storage and the high-tech sector. Behind that, data centres are required. Efforts are often made by some in this House to suggest that this is some kind of folly but data centres today are what the advance factories were in the 1970s and 1980s.
They drive the economy, our education system, our hospitals and our banking system. Effectively, they are a repository for the information that sits behind the way we live our lives now. This is not just something we can just cast aside, bury our heads in the sand and say we should ignore it. We need to be mindful of that. If data centres do not end up in Ireland, they will end up somewhere else and we will lose out in the long term. However, I accept that we have to manage this matter.
Data Centres
103. Deputy Paul Murphy asked the Minister for Climate, Energy and the Environment the action he will take to reduce energy demand and carbon emissions from data centres in view of our legal obligations to reduce both energy usage and carbon emissions; his views on whether the new CRU policy is compatible with those obligations; and if he will make a statement on the matter. [73592/25]
It seems we would be losing out on our country becoming a toxic waste ground. The new CRU large user policy enables further exponential expansion of data centres. It allows them to generate their own electricity using fossil fuels. The CRU is also allowing data centres to connect directly to the gas network in South Dublin County Council's area. How can the Government possibly say any of this is in line with our legal obligations to reduce both final energy consumption and carbon emissions?
I appreciate the Deputy's interest in this matter. It does not align with mine, but his is a well-held view and he has aired it on more than one occasion.
Ireland has attracted the best data centre and tech companies in the world. This is a really important relationship and the Government continues to work with the sector towards a secure and decarbonised energy future. Data centres are central to Ireland’s economic and digital future. However, data centres, like all large energy users, have to exist within the boundaries of our climate legislation and targets. Climate Action Plan 2025 includes measures to increase the proportion of renewable electricity to up to 80% by 2030. Data centres can be at the heart of our renewable future - using renewable electricity to power data, create jobs and to generate tax revenue for the State. In that context, the CRU’s LEU connection policy will support the Government's renewable energy targets because data centres above a certain threshold will be required to meet at least 80% of their annual demand with new additional renewable electricity generated in the Republic of Ireland.
The energy efficiency directive, EED, contains many new measures aimed at further enhancing energy efficiency across society, including requirements under Article 12 to enhance the energy efficiency of data centres across all EU member states. Ongoing mandatory data centre energy and sustainability performance reporting across the EU under the EED will enhance data centre sustainability and drive energy efficiency by requiring data collection to report on their energy performance. The EU Commission is using this data to establish an EU-wide rating scheme and further legislation to address energy usage.
The programme for Government contains a commitment to enhance data centres' use of renewable energy resources, energy-efficient technologies and effective solutions, such as waste heat capture, to reduce their carbon footprint.
Will the Minister of State expand on how it is possible to have a policy of exponential growth of data centres that are using fossil fuels? How does that coincide with what he says to the effect that this has to exist within the bounds of our climate targets. We are signed up to the EED, which has a legally binding target to reduce energy consumption by 11.7% by 2030. Ireland's target reduction is 16%. Yet, we have a decision paper from the CRU which states that medium-term electricity demand from data centres could reach 5.8 GW. That is equal to the peak energy demand for the entire country. It is also more than the entire 5 GW target for offshore wind energy by 2030, which the Government is sure to meet.
It has been stated that Ireland's total electricity demand has grown by 30% over the past ten years, with the demand from data centres having greatly contributed to this level of growth. This level of growth is projected to continue over the next ten years, with data centres representing a larger share of total energy demand. How does that tally with a commitment and a legal obligation to reduce energy demand when it is being state that this is going to continue to go up fast and that data centres are a driving factor.
The Deputy has to look at it from a Government perspective. We have to ensure the economy remains robust and that we have a strategy in place to ensure - based on the sector trends - that we are able to attract investment in order to continue to provide employment for what is a growing population. Sometimes, others bury their heads in the sand - I am not suggesting Deputy Murphy does - and say that data centres are bad and that we cannot facilitate them any more. The Government does not agree with that position. The direction of travel in relation to the tech sector and the way we live our lives means that so much more is done in a cloud-based environment. You cannot, on the one hand, be of the view that we should have a strong economy and, on the other, ignore the fundamental building blocks of what that future economy will look like and operate. There is a requirement, and we have to live within the terms of the EU directive. As already stated, data centres, like all large energy users, have to exist within the boundaries of our climate legislation and targets.
That is my question. The Minister of State is in the Department of the environment. He cannot just say something and then move on. It is completely illogical to say, on the one hand, that we are committed to this legally binding target of reducing energy consumption but, on the other, that we agree with a decision paper which states that our level of electricity usage will continue to grow and that this is going to be driven by the data centres. You have to pick one or the other. We will either reduce energy consumption or we are going to allow it to increase. Increasing energy consumption is going to lead to a significant increase in greenhouse gas emissions. The latter is because data centres are now directly connected to fossil fuel usage. Originally, it used to be the case that we should not worry and that it would all be renewables. In South Dublin County Council's area, the CRU has made a decision to grant permission for Gas Networks Ireland to connect a gas pipeline to the massive Vantage data centre in Profile Park. That decision states that the emissions will result in 3 million tonnes of CO2 equivalent. Some 32% of the emissions in that area already come from data centres. Emissions are going to go up even further.
The Deputy has to accept that the long-term strategy of the Government is to generate much more electricity from renewables. We have a target of 20 GW of offshore renewable energy by 2040. The Deputy is right in the sense that gas is a transition fuel, as we move away from fossil fuels.
I did not say that.
It is. Deputy Murphy made the point that gas is the basis of his argument. We have to accept that as we work towards bringing more renewables onto the grid, we just cannot stand still, bury our heads in the sand and watch data centres and tech companies and the investment associated with them go elsewhere. If that happened, our society would be left behind, our economy would be in trouble and we would not be able to invest in services, hospitals or whatever else.
We have to have a balanced approach, while also keeping to our trajectory in the context of eliminating fossil fuels. We have a very clear plan for bringing renewables onto the grid by 2040. We are now moving ahead with a plan-led approach. We recently held the auction for 900 MW of offshore renewable energy at the Tonn Nua site. We intend to continue with that at pace. However, gas has to be a transition fuel as we work our way through the process.
Wind Energy Generation
104. Deputy Barry Ward asked the Minister for Climate, Energy and the Environment the position regarding initiatives within his Department that seek to prioritise the fast tracking of offshore wind energy infrastructure; and if he will make a statement on the matter. [73598/25]
My question is about the provision of offshore wind energy and initiatives his Department might have put in place to fast-track that, particularly in the context of dealing with the frustrations of people who recognise that, as I understand it, there is currently no operating offshore wind capacity in Ireland.
The Deputy is right in what he said. The lack of capacity is due to the phasing out of the facility on the Arklow Bank. The Deputy will be familiar with the announcement recently about the Tonn Nua site, which is just off the south-east coast. That announcement was very positive in the sense that an auction system was deployed. We had four bidders and we got a very good price at less than €100 per MW hour. There have been a number of auctions in other countries that have effectively failed because there were no bidders. We are on the right path
The plan-led development through the use of the designated marine area plan, DMAP, is a critical part of the Government's strategic plan for our maritime area. This is reflected by the commitment stated in the programme for Government to fast-track offshore wind development by prioritising the publication of the DMAPs. There is a plan in place, which I am shepherding through at the minute. It is a national DMAP. We hope to have it concluded by the end of 2027.
Three additional sites have been identified in the south-east coast DMAP. Tonn Nua has gone to auction. It has been announced that there are three other opportunities there, and they will be advanced in a timely way. There are some real issues to be resolved in terms of how that might pan out. Then, by 2027, we hope to have a national DMAP that will identify enough sites to get us to our 2040 target of an additional 15 GW of electricity. That is progressing with pace. In addition to that, we want to identify at least one but potentially two sites suitable for floating offshore wind, which really has great potential from an Irish perspective in the sense that it would give us the capacity to generate enormous amounts of electricity that might potentially be used for export, through interconnection or with some of the imaginative projects which the ESB and others are involved in, looking at converting to hydrogen or ammonia as a methodology of storing the energy.
I do recognise that some progress has been made but I know from speaking to people around the country that there is a real frustration at the lack of speed of decision-making. If a decision is made today to start a process to establish a wind farm offshore, whether that is implanted into the seabed or floating, we are many years away from the realisation of that plan. Honestly, people do not understand why that should be the case. It should not take that long. I recognise what the Government has put forward in terms of an infrastructure plan that it is going to shorten those times but in terms of what the Minister's Department is doing, what specifically are we doing to make sure that these things can happen faster? In particular, the Minister State said there have been no bidders. Has the Department examined why that is the case and identified why it is that the many international companies that are operating in this field feel it is not worth their while bidding for projects off the coast of Ireland? If it does not have bidders, what are we doing about that? Is there some other State instrument that can step in to fill that place or is there something we need to change in the terms of that auction?
To the Deputy's last point, we are fortunate that due to the way in which our auctions are designed, we have attracted significant bidders. Four is particularly good. There were instances in the UK, Denmark and Germany where there were no bidders because they had moved away from the contract for difference component of the auction. We are, therefore, in a very healthy position. What we have done in recent years is move towards the plan-led approach. Prior to that, it was basically that developers identified sites and came forward. The planning process was somewhat slower at that time and they ran into some complications. There are a number of them out there - about five - that we want to progress and are progressing through the planning phases. They will be very significant contributors to our generation. However, the plan-led approach that is there now is working. The example I have given the Deputy of the Tonn Nua site off the south-east coast in terms of the design of the auction has worked really well, and there is interest. We are regularly in contact with potential bidders to ensure they understand what the Government strategy is. What they want is certainty. They want to know that the country is committed to offshore, which we are, and that there is a pipeline of projects. We have set a plan in place now for that timeline.
I welcome the fact the Minister is reiterating the State's commitment to offshore because as an offshore island, essentially, this has huge potential for us. I think of the projects even in my own constituency or off the coast of my constituency in the case of the Codling Wind Park and Dublin Array projects. They are hugely important projects but the level of investment from RWE or the contracting companies there is enormous before they ever get off the ground. That has to be a disincentive in real terms for companies that actually want to invest in our infrastructure, provide us with clean energy and help us to get to a point where we are actually a net energy exporter. That is really important.
I appreciate what the Minister said but I ask him to redouble his efforts in terms of specifically addressing the delays issues. I recognise what the plan is in terms of judicial reviews and establishing a local standard for judicial reviews; a person cannot be living in County Donegal and object to one off Rosses Point or something like that. That is really important. Let us make it easy for people to do it, and the easiest way to do it is to make it quicker.
I fully support what the Deputy is saying. The projects he referred to are projects that have been there. They are referred to as the phase 1 projects. They were in existence prior to the State intervening to resolve the issue by having a plan-led approach and setting out a clearer pathway for companies to progress their ambitions. Of course, we are working with those companies also to ensure that those projects, which, as I said, are phase 1 and somewhat legacy to the system that is there now, are progressed and progressed quickly.
There is work under way too with the Maritime Area Regulatory Authority, MARA, to ensure the appropriate permissions are progressed. There is the potential for some changes there that will expedite those projects. However, the plan-led approach is giving a very clear direction of travel in terms of the commitment to offshore energy generation and a commitment to ensure there is a pipeline into the future towards 2040, with real targets and a recognition by the State that it will have to stand behind those projects through the contract for difference approach that has been successful and is attractive to bring that investment to the country.