After several years of unprecedented volatility, energy remains firmly on the agenda for Irish businesses. While wholesale electricity and gas markets have stabilised compared with the sharp price movements seen in recent years, commercial energy costs continue to be influenced by a combination of global events, domestic market developments and high regulatory charges.
For businesses approaching contract renewal, understanding what is driving prices is now just as important as comparing supplier quotations. Market conditions can change quickly, and procurement decisions made today may have financial implications for several years.
This article provides an overview of the key factors that influence commercial energy prices, how they affect commercial electricity and gas contracts today, and why procurement planning is becoming increasingly important.
What is shaping commercial energy prices?
Commercial electricity and gas prices are influenced by a combination of international market forces and domestic factors. While wholesale energy prices often attract the headlines, they are only one part of the overall picture. For Irish businesses, commercial energy costs are primarily shaped by three factors: global energy markets, Ireland's electricity generation mix and regulated network charges.
International energy markets continue to have the greatest influence on commercial energy prices. Ireland relies heavily on natural gas to generate electricity, meaning developments in European and global gas markets have a direct impact on wholesale electricity prices. Earlier this year, geopolitical tensions in the Middle East contributed to increased volatility in global gas and oil markets, placing upward pressure on wholesale energy prices across Europe. Although markets have stabilised in recent months, wholesale gas prices remain sensitive to geopolitical developments, European gas storage levels and global LNG supply.
Ireland's electricity generation mix also plays an important role. Renewable generation continues to increase, with wind supplying approximately 44% of Ireland's electricity so far this year and solar contributing around 5%. Higher renewable output reduces reliance on gas-fired generation during favourable weather conditions, helping to moderate wholesale electricity prices. However, natural gas remains the primary fuel used to generate electricity in Ireland, meaning fluctuations in gas prices continue to influence the wholesale electricity market.
The final component is regulated network and market charges. These costs are set independently of wholesale energy markets and can account for around half of commercial electricity bills for many businesses. Over the past two years, network charges have increased by more than 10% as investment continues in Ireland's electricity infrastructure to support growing demand, renewable generation and the transition to a lower-carbon energy system. As a result, changes in wholesale electricity prices are only partly reflected in the final rates businesses pay. For businesses comparing supplier offers, it is therefore important to consider the total cost of a contract rather than focusing solely on wholesale market movements or unit rates.
Current market conditions
Businesses pricing new commercial electricity contracts today are generally paying 3%-5% more than they would have at the same time last year. While wholesale electricity prices have increased, the overall rise in contract prices has been more moderate because regulated network charges account for a significant proportion of the total electricity bill, reducing the impact of wholesale market movements on the final price businesses pay.
Commercial gas contracts have seen larger increases. Businesses renewing today are typically paying around 4% more than last year, reflecting higher wholesale gas prices and continued pressure on international gas markets. European gas storage remains below the five-year average, while competition for global LNG supplies continues ahead of winter, providing ongoing support for wholesale gas prices.
For businesses approaching contract renewal, understanding how these market factors influence supplier pricing is often more valuable than focusing on a single headline price. Looking beyond the unit rate and considering the overall cost of supply provides a more informed basis for comparing supplier offers.
Procurement matters more than ever
Businesses have little control over wholesale energy markets, geopolitical events or regulated network charges. What they can control is how and when they buy their energy.
One of the biggest opportunities to reduce costs is to begin the procurement process well before an existing contract expires. Leaving procurement until the final weeks of a contract limits the time available to monitor market conditions, compare supplier offers and consider different purchasing strategies. Utilityfair regularly arranges contracts for large energy users up to six months before an existing agreement expires, giving businesses more time to monitor market movements and secure pricing when market conditions are favourable.
Price is also only one part of the decision. Contract length, pricing structure, consumption profile and business objectives should all be considered when evaluating supplier offers. Depending on a business's appetite for price certainty and market risk, the most appropriate solution may be a fixed-price contract, a wholesale-linked product or a shorter-term agreement. For example, even if wholesale gas prices are elevated in the short term, a two or three-year contract can still deliver a competitive average price over the full contract period while providing valuable budget certainty. Procurement is not simply about today's price; it is about balancing cost, risk and certainty over the life of the contract.
Businesses should also regularly review how they consume energy. Changes in operating hours, production levels or site usage can significantly affect the most suitable contract and tariff structure. Procurement decisions based on current energy usage rather than historic consumption are more likely to deliver better long-term value.
In today's market, successful energy procurement is no longer about trying to secure the lowest price on a particular day. It is about developing a procurement strategy that balances cost, risk and flexibility while supporting the long-term needs of the business.
Looking ahead
Commercial energy markets will continue to be influenced by geopolitical developments, global energy markets, Ireland's evolving electricity generation mix and regulated network charges. While wholesale prices will continue to fluctuate, market uncertainty is likely to remain a feature of the commercial energy landscape.
For businesses, the focus should be on ensuring procurement decisions are well planned and aligned with their operational and financial objectives. Starting the procurement process early, understanding the different contract options available and taking a structured approach to purchasing can help businesses respond more effectively to changing market conditions.
At Utilityfair, we support more than 20,000 Irish businesses with independent market analysis, supplier comparisons and procurement support. Our role is not to predict where energy prices will move next, but to help businesses make informed procurement decisions based on current market conditions, their energy requirements and their approach to managing price risk.
Whether renewing a single site or managing a multi-site portfolio, taking the time to review procurement options well before contract renewal can make a significant difference to both cost and risk.
If your business is approaching an energy contract renewal, Utilityfair can compare offers from all commercial electricity and gas suppliers side-by-side, providing independent procurement advice to help you secure the right contract for your business. To learn more, visit: https://bit.ly/CompareElectricityAndGasCosts