Households are bracing for a tough year ahead as energy costs are expected to rise significantly in 2025. The government has announced plans to increase the VAT rate on gas and electricity from 9% to 13.5% by the end of April, adding an estimated €70 to the average electricity bill and €60 to annual gas costs. Energy Costs Set to Soar in 2025: What Households Need to Know
On top of this, households will face rising grid fees and an increase in the carbon tax in May, further adding to the strain. In 2024, the Commission for Regulation of Utilities (CRU) increased grid or network fees, which already cost the average household an additional €60 for gas and over €100 for electricity. These fees, alongside operating costs, levies, and VAT, make up nearly half of a household’s energy bill, with wholesale prices accounting for the other half.
Despite some price cuts in 2023 and 2024, energy prices remain stubbornly high. Wholesale gas prices are still double what they were before the energy crisis, and wholesale electricity prices average over €100 per megawatt hour—well above the pre-Ukraine war levels of €35-€40.
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How to Manage Rising Costs
With energy prices unlikely to drop, Irish households need to take proactive measures to reduce their bills. Shopping around for better energy deals, improving home insulation, and using energy-efficient appliances can make a significant difference. However, the easiest way to take control is by tracking your usage and identifying areas for savings.
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The Bigger Picture
Energy suppliers may face challenges in keeping prices stable due to rising operational costs and the need for significant investment in Ireland’s energy infrastructure to accommodate a growing population and the move towards Net Zero. While the government’s VAT hike and carbon tax increases are aimed at addressing these issues, they come at a steep cost for ordinary households.
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Energy Costs Set to Soar in 2025: What Households Need to Know
