Simon Dobey examines the increase in energy prices, its connection with data centres, and what students can do to keep their bills down.
The price of both electricity and gas for residential users continues to unabatedly and astronomically rise. All of the nine major electricity suppliers have announced increases in the price of electricity this autumn. On average, the price of electricity has increased by 14.2% for the autumn months. Meanwhile, residential gas prices have followed a similar alarming trend, rising on average 13.6%, for the same period. These price increases are just the latest in a long line of increases in both gas and electricity affecting households this year. Eurostat figures show that Ireland currently has the fourth highest electricity prices in the European Union, and research from Bank Of America forecasts that energy prices in Europe will increase 30% this year and a further 13 to 26% in 2022.
Before Ireland’s energy supply shortage is examined, students should be aware of a number of ways in which they can lower their energy costs. Consumer rights organisations are urging people to switch providers where possible. Energy companies will offer discount rates for first time customers which can be as high as 40%. However, switching is often far easier for homeowners than for tenants. If you are a tenant and your energy bills are in your landlord's name you will be unable to switch providers, without the assistance of your landlord. Additionally, the majority of residential energy providers will require you to pay a fee in order to prematurely terminate a contract with a supplier, which could negate any savings made.
Furthermore, savings can be made by using energy at night or in the early hours of the morning. Between the hours of 11 p.m and 8 a.m both electricity and gas are charged at a “night rate” which is normally around 50% cheaper than the daytime rates. Using appliances like tumble dryers, washing machines, dishwashers and heating water between these hours could save you money. However, the Dublin Fire Brigade warns against using washing machines, tumble dryers and dishwashers after you go to bed. The standard rate for a night, as opposed to a single unit meter, is around €46 extra, so using energy during night hours will have to become a priority in order for savings to be realised.
It was announced in the budget that the fuel allowance would increase by €5 a week, which is an increase of 18% and brings the totalu to €33 a week. Eligibility for fuel allowance is given to those on certain welfare payments and to those whose earnings are less than €120, an increase of from €100. However, if you live with someone who earns over this threshold the household will not be eligible to receive fuel allowance and any household is only entitled to a single fuel allowance.
The rising cost of energy has a number of contributing factors. In terms of exogenous shocks, significantly reduced gas supplies from Russia into Europe have had adverse effects on wholesale gas prices across the European Union. The difficult situation has been compounded by the unexpected temporary closures of Huntstown and Whitegate gas power stations. Furthermore, according to the world climate service, June and July of 2021 were the least windy for parts of the UK and Ireland since the 1960’s.
In its All Ireland Generation Capacity Statement, Eirgrid, the company responsible for the operation of the national power grid listed data centres specifically as one of the main drivers of increased electricity demand. The report stated, “demand is driven by economic activity, assumptions on energy efficiency and the large growth of energy demand and data centres”. People Before Profit proposed a bill to cease the construction of any new data centres, however, it failed to be implemented further than the first step of the legislative process.
Speaking to The University Observer Deputy Paul Murphy of People Before Profit, stated that “data centres are currently using 11% of all the electricity that is produced in this country” and that “by 2030, based on the planning permissions, they will use up to 30%.”
"Data centres are currently using 11% of all the electricity that is produced in this country"
Deputy Murphy added that “Ireland is Europe's data centre hub”, something he attributes to the national strategy of successive governments, Ireland’s temperate climate, which means the cost of cooling data centres is lower here than elsewhere. Additionally, Deputy Murphy believes that “Ireland's tax haven status” is also having an impact on the disproportionate number of data centres established here.
Opposition to the construction of further data centres is also building locally as well as nationally. Independent councillor and Mayor for South Dublin County Council, Peter Kavanagh, spoke to The University Observer regarding a motion passed by the Council calling for a stop to the construction of any new data centres until such a time that their effect on the national energy grid can be mitigated. Mayor Kavanagh also noted the effect data centres are having on water supply and biodiversity surrounding greenfield sites. Mayor Kavanagh is also hopeful that under a new development plan the council can put in place planning conditions that are much stricter which will ideally de-incentivise data centres from locating in the area.
In terms of controlling price increases for residential consumers, Deputy Murphy proposed that the government introduce a “maximum price order”. Legally, the government has the power to institute a maximum price order on a good or service under circumstances which constitute “an emergency in the supply of it”. “The response to that by those who will oppose (maximum price orders) is that (the companies which supply energy) will go out of business” Murphy added. Maximum price orders have already been implemented in Great Britain since 2019 and since the start of August 10 utility providers have collapsed. However, Deputy Murphy stated that “the whole deregulation of the energy supply sector doesn’t make any sense at all.” and added that this is particularly poignant due to the ongoing climate crisis.
Deputy Murphy also stated that residential users are clearly being asked to bear the brunt of taxes which seek to lower carbon emissions and that “the evidence in relation to a carbon tax assisting in the transition to a low or zero carbon economy, is incredibly flimsy.” Prices per Kilowatt Hour of electricity and gas are roughly double for households what they are for business’. Furthermore, the PSO levy, a tax aimed at providing funding for renewable energy resources, is much higher for residential users than incorporated entities. Budget 2022 will also contribute to the inequality between households and businesses with regards to fuel and heating costs, through the carbon tax. However, the two industries which emit the most carbon emissions, the agricultural and aviation sectors, will remain exempt from the carbon tax.