In Ireland, our wholesale electricity prices directly track the price of natural gas because 46% of our electricity is generated using mostly imported natural gas. Imports of natural gas rose from 32% in 2017 to 77.5% in 2023. This makes the Single Electricity Market particularly vulnerable. However, retail electricity prices track the “forward price” of natural gas – this is the price of gas bought up to two years previously.
When global gas prices spiked following Russia’s invasion of Ukraine in 2022, this triggered a dramatic and sustained spike in the cost of generating electricity due to Ireland’s exposure to global gas market shocks.