The cost of energy production is set to soar to “an all time high” over the next few months, Bord Gáis has admitted.
The company has announced that prices will rise from 24th October and households should expect to pay around €200 extra a year in gas and electricity bills.
The head of communications at price comparison website Bonkers.ie, Darragh Cassidy, told Newstalk there are a number of factors behind the surge in production costs:
“The first is that the price of gas has absolutely skyrocketed on wholesale markets in recent weeks - it’s up by over 200%. This feeds through also into our electricity prices, around 40% of our electricity is generated from burning gas.
“The second issue is that there’s been inadequate weather conditions. It’s been quite calm over the past few months, and this has meant that the wind turbines haven’t been blowing as much as they usually would be. So there’s been less supply of renewable energy on the grid.
“And also two big gas fired power plants have been out of action for over a year. These usually supply around 15% of our electricity. They’ve been out of action due partly to Covid. And that means there’s been less electricity on the system.
“So really it’s just been a mix of several things coming together to create the perfect storm unfortunately.”
Prices would drop if the weather changes and becomes more windy, allowing the large number of wind turbines in Ireland to generate more electricity.
“I think the best thing we can hope for this winter if we want to see a reduction [in prices] is to have a mild winter and a windy winter,” Cassidy adds.
“If you have a cold calm winter, it could put pressure on prices because again obviously people will be using more fuel to heat their home. But it would also mean that there is less wind output on the system.”
Going forward, Cassidy believes that the price surge should prompt the Government to diversify their sources of renewable energy.
“We seem to have all our eggs in one basket, which is onshore wind farms.
“We need to look at more solar energy, more biofuels and even some offshore wind farms as well.”