ESRI slams expensive universal energy credits - as the Tánaiste won't rule out bringing them back

UNIVERSAL ENERGY CREDITS have cost hundreds of millions of euro more than targeted measures that could have genuinely lifted vulnerable households out of energy poverty, the ESRI has said.

The research institute’s findings are published just one day after Minister for Finance Simon Harris indicated he’s not ruling out the reintroduction of universal credits in the next budget.

Electricity credits of €125 were paid out to all 2.3 million household accounts in 2024 and 2025, but scrapped after that.

Harris said yesterday that there are people in Ireland who don’t qualify for fuel allowance social welfare payments who are “still finding things really tough”. These households “won’t be forgotten” and “won’t be left out”, Harris said on the Claire Byrne show on Newstalk.

Asked about universal credits, Harris said: “I think it would be a foolish and arrogant government that would rule out anything right now.”

The ESRI’s latest research paper may give the finance minister pause for thought, however.

Energy poverty is broader than official estimates, according to the ESRI, with 30% of households experiencing some form of energy affordability problem. 

The ESRI suggested these households would need, on average, about €480 per year in additional income to exit energy poverty. This obviously means the €250 electricity credit in 2024-2025 left them with a shortfall.

Had the government targeted a €480 subsidy at the households that needed it – rather than giving a bit less to everyone, regardless of need – it would have cost €370 million.

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By contrast, the universal electricity credit cost €550-575 million, the ESRI said.

“A €575 million fiscal envelope could be used far more effectively through targeted support,” the ESRI said.

“Higher, targeted [payments] are needed for vulnerable households to avoid energy poverty.”

The ESRI’s research indicates Sinn Féin’s call for an emergency budget to introduce a €400 electricity credit would also be extremely expensive. Sinn Féin has repeatedly criticised the government’s decision to withdraw energy credits last year. 

So what are the possible policies the government could consider in response to unexpected shocks to energy prices? The ESRI suggested temporary electricity credits, targeted bill supports and deferred payment schemes.

In the longer term, investment in energy efficiency, retrofitting and renewables is needed, along with “supportive grant schemes that strengthen household resilience and lower exposure to future shocks”, the ESRI said.

Energy poverty is closely linked with other forms of deprivation, and in Ireland it is concentrated in certain types of households including low-income households, single-adult households and renters. Energy poverty disproportionately affects low-income households led by younger people and by women.

Only about a third of households in energy poverty are in receipt of fuel allowance, the ESRI estimates.

People in energy poverty are much more likely to be in receipt of social welfare payments, notably disability allowance. 

“The high coverage of disability supports suggests that health-related challenges further deepen the vulnerability of this group,” the researchers warned.

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