Spanish energy supplier Iberdrola has announced it is exiting the Irish gas and electricity retail market.

It said the move follows an internal strategic review that found market conditions and pricing were a barrier to its planned growth and ambitions.

The firm added that the situation has been exacerbated in recent months by the unprecedented increase in global wholesale energy costs.

The business said the exit will be "controlled" and it has formally notified the Commission for Regulation of Utilities (CRU) about its decision.

It said that the regulator has been asked to initiate the automatic transition of Iberdrola customers' gas and electricity accounts to its designated suppliers.

Iberdrola has around 32,000 Irish customers, the company said.

Gas customers will be moved to Bord Gáis Energy while electricity customers will be transitioned to Electric Ireland.

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Iberdrola added that there will be no disruption to supplies and that the movement will take place on a date to be determined by the CRU.

"Despite our best efforts, it's become increasingly clear that the dynamics and pricing within the Irish energy supply market mean we will not be able to achieve what we want for our retail business in Ireland," a spokesperson said.

"Without the ability to achieve long-term customer growth on both a competitive and commercial basis, we've made the difficult decision to leave the supply market in a controlled, responsible and appropriate manner, with minimum impact on our customers," the spokesperson said.

"We'll be working closely with the CRU, Gas Point Registration Operator and Meter Registration System Operator to ensure a smooth and seamless transition for our customers and we thank each and every one of them for their support over the last three years," the spokesperson added.

Aoife MacEvilly, Commissioner at the CRU, said the Supplier of Last Resort process will ensure that Iberdrola Energy customers will not have any interruption to their electricity or gas supply and customers do not need to take any immediate action.

"Following a short standstill period, these customers have the option to switch to another supplier," she said.

"While the decision by Iberdrola to exit the supply market for commercial reasons is disappointing, there are still a number of suppliers of both electricity and gas to provide options for customers with wide range of tariffs to suit customer's needs."

In a statement, Bord Gáis Energy, reassured gas customers of Iberdrola that they will seamlessly transfer to it.

"Gas customers of Iberdrola need take no immediate action as the transfer to Bord Gáis Energy will occur automatically," it said.

Speaking to reporters in Brussels, Taoiseach Micheal Martin said the departure of Iberdrola from the Irish energy market reflects the broader challenges within the sector due to the war in Ukraine.

"The customers will be looked after insofar as they'll go off to Electric Ireland and then will be free to make decisions in terms of their provider," he told reporters.

"What's important is they're continuing on in respect of renewables, and they have some interesting partnerships with Irish companies in respect of that renewable space, which is where Ireland has to really move in terms of the offshore wind agenda," he added.

In January, another new electricity provider, Bright Energy, announced that it was exiting the Irish market following a strategic review.

The firm, which launched in the summer of 2020, blamed increases in prices on the wholesale energy market that it claimed were impacting its operations.

It had just 1,300 customers left to transfer to supplier of last resort, Electric Ireland, at the time it made the decision.

Another provider, Glow Power, has also ceased taking on new customers according to a notice poster on its website.

In 2019 Just Energy announced it was leaving for strategic reasons to focus on its much larger businesses in the UK and North America.

That was the same year that Iberdrola began operating in Ireland when it launched here promising a €100m investment.

The company said its investment in and contribution to Ireland's renewable energy future is unaffected by the decision to exit from the retail market.

The firm is currently developing a 3GW of offshore wind, in partnership with DP Energy, as well as battery energy storage system projects.

Iberdrola is the second supplier to exit the Irish market in recent months, following Bright's exit at the start of the year.

Daragh Cassidy of comparison website said further exits from the Irish market can't be ruled out.

"Electricity prices in Ireland are the fourth most expensive in the EU, and the most expensive once you strip out the effects of taxation," he said.

"However these higher prices aren’t due to a lack of competition among suppliers, but rather higher costs and inefficiencies with generating electricity in Ireland, as well as the costs of transitioning to renewables.

"The increase in electricity use from data centres is also having an impact. So Iberdrola’s exit is unlikely to have any material impact on prices," he added.