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Electricity users across Ireland are set to see higher bills from next year as funding is put in place for a large-scale overhaul of the national electricity grid. Monthly increases are expected to range from €1 to as much as €1.75 before VAT, depending on how the investment programme progresses. While the individual increase may appear modest, it forms part of a much broader and costly infrastructure plan that could total €18.9 billion over the next five years.

The Commission for Regulation of Utilities has approved initial capital expenditure of €13.8 billion by ESB Networks and EirGrid, the organisations responsible for maintaining and operating the electricity system. If performance and delivery targets are met, the regulator has signalled that spending can increase to the full €18.9 billion during the current regulatory period.

Under the approved model, domestic customers will shoulder 55 percent of the overall cost, with businesses paying the remaining 45 percent. Network charges already account for between 25 percent and 30 percent of an average electricity bill, which means these increases will add to costs that are already significant for many households and companies.

The scale of the investment reflects the scale of Ireland’s policy ambitions. The upgraded grid is intended to support the delivery of 300,000 new homes by 2030, alongside the connection of one million electric vehicles and approximately 680,000 heat pumps. It will also underpin the electrification of public transport, including Dublin’s MetroLink project and the expansion of electric bus fleets nationwide.

In addition, the grid is being reinforced to cope with more frequent extreme weather events linked to climate change and to handle substantially higher volumes of renewable electricity from wind and solar generation. The programme includes more than 520 individual capital projects, such as major transmission upgrades, new distribution substations, the replacement of around 80,000 poles, and the construction of hundreds of kilometres of overhead and underground power lines.

Funding will come from a combination of sources. The State is committing €3.5 billion directly, with between €4 billion and €5 billion expected to be raised through bond markets. The remaining costs will be recovered through network charges applied to electricity bills over time.

The timing of these increases is contentious. Almost 300,000 electricity users are currently in arrears, no additional once-off energy credits were announced in the most recent Budget, and Central Statistics Office data shows electricity prices have risen by 5 percent over the past year. Regulators have highlighted that switching supplier and using time-of-use tariffs can reduce costs, although this assumes consumers have the flexibility and resources to make those changes.

From an economic perspective, the underlying question is whether consumers are being asked to fund infrastructure fast enough, and efficiently enough, to deliver the promised benefits. The regulator has stated it will closely monitor delivery to ensure value for money, but the long-term impact on household and business costs will remain under scrutiny as the programme progresses.

Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.