Every electricity customer in Ireland pays a charge called the PSO levy. It appears on your bill as a separate line item, currently costing around €19 per year. Here's what it is, why it exists, and where the money goes.
What Is the PSO Levy?
PSO stands for Public Service Obligation. It's a government-mandated charge that funds renewable energy generation in Ireland.
The levy supports wind farms, solar installations, and other renewable electricity projects by guaranteeing them a minimum price for the power they generate. When wholesale electricity prices fall below this guaranteed level, the PSO levy makes up the difference.
Every electricity supplier in Ireland is required to collect this levy from customers and pass it to the relevant bodies.
Current PSO Levy Rate (2025/2026)
The PSO levy for the period 1 October 2025 to 30 September 2026 is:
| Customer Type | Monthly Rate | Annual Rate |
|---|---|---|
| Residential | €1.59 (incl. VAT) | €19.10 (incl. VAT) |
| Small Business (<30 kVA) | €10.75/month | €129/year |
| Larger Business | €1.31 per kVA | Based on capacity |
For residential customers, this is a flat charge—everyone pays the same regardless of how much electricity they use.
The levy dropped significantly from previous years. For 2024/25, it was €38.76 per year, so the current rate represents a reduction of approximately 50%.
Why Does the PSO Levy Fluctuate?
The PSO levy changes annually based on several factors:
Wholesale Electricity Prices
When wholesale prices are high, renewable generators earn more from selling electricity on the open market. They need less subsidy support, so the PSO levy falls.
When wholesale prices are low, generators need more support to reach their guaranteed minimum price, so the levy increases.
Renewable Output
In years with strong wind and high renewable output, the cost of subsidies increases (more electricity to subsidise). However, high renewable output often coincides with lower wholesale prices, complicating the calculation.
Scheme Costs
The PSO also covers administrative costs and legacy support schemes for older power plants. These costs are relatively stable.
Historical PSO Levy Rates
The levy has varied dramatically over the years:
| Period | Annual Rate | Notes |
|---|---|---|
| 2025/26 | €19.10 | Current rate |
| 2024/25 | €38.76 | Levy returned after credit |
| 2023/24 | €0 | Suspended due to high prices |
| 2022/23 | -€89.10 | Credit (negative levy) |
| 2021/22 | €58.57 | Standard charge |
| 2020/21 | €35.07 | Lower than average |
| 2019/20 | €75.73 | Relatively high |
| 2018/19 | €105.53 | Peak levy |
During 2022/23, wholesale prices were so high that renewable generators needed no subsidy. The government used this to provide a rebate to customers—effectively a negative PSO levy.
What Does the PSO Fund?
The levy supports several schemes:
RESS (Renewable Electricity Support Scheme)
The main scheme supporting new wind and solar projects. Developers bid for contracts through competitive auctions, and successful projects receive a guaranteed price for their electricity for 15-20 years.
Older Support Schemes
Legacy arrangements including:
- REFIT (Renewable Energy Feed-in Tariff)—predecessor to RESS
- AER (Alternative Energy Requirement)—earlier renewable support
- PSO for peat—support for peat-burning power stations (being phased out)
High-Efficiency CHP
Combined Heat and Power plants that meet efficiency standards receive some PSO support.
Can You Avoid Paying the PSO Levy?
No. The PSO levy is mandatory for all electricity customers in Ireland. It's a government-mandated charge that suppliers must collect.
You cannot:
- Opt out of the levy
- Choose a supplier that doesn't charge it
- Reduce it by using less electricity (it's a fixed charge)
The only way to avoid the PSO levy entirely would be to disconnect from the electricity grid—which isn't practical for most households.
How the PSO Levy Appears on Your Bill
The PSO levy is shown as a separate line item on your electricity bill:
Electricity units: 1,400 kWh × 29.36c €411.04
Standing charge: 61 days × 55.89c €34.09
PSO Levy €1.46
-------
Subtotal €446.59
VAT @ 9% €40.19
-------
TOTAL €486.78
Note: The PSO levy shown on bi-monthly bills is typically around €3.18 (two months' worth). VAT of 9% is then applied on top.
PSO Levy for Businesses
Business customers pay the PSO levy based on their Maximum Import Capacity (MIC)—the maximum electrical load they can draw from the grid.
| Business Size | MIC | Approximate Annual PSO |
|---|---|---|
| Small (shop, office) | <30 kVA | €129/year |
| Medium | 100 kVA | €1,310/year |
| Large | 500 kVA | €6,550/year |
| Very large | 2,000 kVA | €26,200/year |
If you're a business customer, ensure your MIC is set correctly. An unnecessarily high MIC means paying more PSO levy than required.
Common Questions About the PSO Levy
Why do I pay PSO when I have solar panels?
Even with solar panels, you remain connected to the grid and draw electricity from it (at night, on cloudy days, etc.). The PSO levy applies to all grid-connected customers.
However, if you're a microgeneration customer selling surplus electricity back to the grid, you're actually benefiting from schemes that the PSO partly funds.
Is the PSO levy the same as carbon tax?
No. The PSO levy funds renewable energy. Carbon tax is a separate charge that applies to fossil fuels (gas, oil, coal) based on their carbon content. Carbon tax appears on gas bills and heating oil, not on electricity bills directly (though generators pay carbon costs, which affect wholesale prices).
Will the PSO levy go up or down?
It's difficult to predict. The levy depends on wholesale electricity prices, which are influenced by gas prices, renewable output, and broader market conditions.
If wholesale prices stay relatively high, the levy should remain low. If prices fall significantly, the levy could increase.
Do other countries have similar charges?
Yes. Most EU countries have mechanisms to support renewable energy, though the specific structures vary. Ireland's PSO is similar to schemes in other markets.
Summary
The PSO levy is a small but mandatory part of your electricity bill. Currently at €19.10 per year for residential customers, it funds Ireland's transition to renewable energy.
While you can't avoid the levy, understanding what it pays for helps explain this line item on your bill. The charge fluctuates annually based on wholesale electricity prices and renewable energy output.
For more information on electricity charges, see our guides on understanding your bill and standing charges explained.
Last updated: January 2026
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