Irish electricity prices – already the highest in Europe – could rise further as a result of the large-scale investment needed in the coming years,the Department of Public Expenditure has warned.
In briefing documents drawn up for incoming Minister for Public Expenditure Jack Chambers, officials also cautioned that Ireland’s ageing population poses a long-term serious risk in the years ahead to the sustainability of Government spending.
Officials said that between 2026 and 2030 investment of about €20 billion was likely to be needed in the energy sector.
“This is required to cater for increased housing, demand from large energy users (primarily data centres) and to facilitate growth in renewable electricity, including offshore wind.
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“The investment requirements will place upward pressure on electricity prices that are already the highest in the EU. It will also require direct State intervention to allow ESB Networks and EirGrid to finance these investments (likely at least €2-€3.5 billion of new equity).
“Defraying some of the impact on household and businesses’ electricity prices would have a significantly larger investment requirement,” officials said.
The department said if current demographic trends continued, by 2050 Ireland will only have two workers for every person at pension age, as opposed to four workers at present.
“Such an ageing population places huge demands on expenditure on the State pension and related benefits, health and hospital capacity and on exchequer receipts. This is a long-term serious risk to the sustainability of Government expenditure.”
[ Wholesale electricity prices rise 67.7% to highest level in over two yearsOpens in new window ]
The briefing documents show that department officials were also concerned at initiatives to subsidise public transport and to reduce fares for passengers.
Officials said public service obligation funding in transport had increased from €350 million in 2019 to more than €650 million this year.
They said this was in part due to initiatives over the period during which fare revenue decreased by 26 per cent. They suggested the fare cuts may not have led to greater numbers using buses and trains.
“There is limited evidence that the fare initiatives are effective in encouraging modal shift as the increase in passenger numbers has not kept up with overall population increases. Network enhancement and new services are likely to have a greater impact on passenger numbers,” the briefing documents state.
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“A balance needs to be found between the exchequer annual subvention and the revenue raised by fares.”
The department also raised concerns that the cost of a planned investigation into allegations of abuse in schools were “likely to be very significant”.
It suggested that smaller class sizes in schools would not be on the agenda unless the Department of Education addressed overspending.
