While tech multinationals are major contributors to the economy, their seemingly endless appetite for data facilities is placing huge strain on our national grid and the country’s climate goals. Paul O’Donoghue looks at the options

Ireland has a data centre problem.

On the one hand, multinational companies love building the facilities here.

Data centres are crucial for tech companies to function and most big US firms’ European headquarters are based in Ireland, contributing to record corporation tax of €28bn last year.

Add in the fact that the country has an ideal climate — the mild air temperature saves money on cooling down the equipment — and it seems like a no-brainer.

This is why there are about 90 data centres in Ireland, with an additional 40 either in the planning system or in development.

But here’s where the problem comes in: all these data centres consume energy. Lots and lots of energy.

According to the Central Statistics Office, data centres accounted for just 5% of Ireland’s electricity consumption in 2015.

By 2023 — less than a decade later — that had more than quadrupled to 21%.

These facilities now use more electricity than all of the urban homes in Ireland.

In a day, a typical data centre consumes the same amount of energy as a town with tens of thousands of people.

There are now major concerns that all this electricity going towards data centres has put too much strain on the country’s grid, and could even cause blackouts.

Add into the mix that there are also worries about how these facilities contribute to Ireland’s greenhouse gas emissions, and it’s clear that the Commission for the Regulation of Utilities (CRU), Ireland’s energy regulator, has a dilemma on its hands.

The organisation has just proposed a new rule which would mean that new data centres would have to provide their own energy generation or storage.

This would try to ensure that new data centres won’t put additional pressure on existing electricity supplies.

The CRU said the idea was to provide a “potential pathway” for connection applications for new data centres.

This is needed because Eirgrid, the state electricity grid operator, imposed a de facto moratorium on data centre developments in the greater Dublin area in 2021.

The organisation said that due to a significant power “generation deficit”, it would not give permits for new data centres built in the region to connect to the electricity grid.

Some data centre developers have looked for alternative routes to market, such as connecting to the country’s gas network, or building in different areas.

But the CRU’s proposed rule is an aim to simplify the process and make things more straightforward.

Essentially, if you can provide a source for meeting your own electricity needs, you could build a data centre.

Companies will also have to ensure that the generation or storage is located on or near the data centre site, and must be able to sell power back to the wholesale market.

The policy is still at proposal stage — the CRU is running a consultation on the proposed changes, with those interested able to make submissions until April 4.

It’s expected that the regulator’s final decision will be published later this year.

The organisation will have plenty of paperwork to sift through, with plenty of strong public reaction to the proposal.

The rules are an attempt to keep everyone happy. Give data centres a way to connect to the grid again, to cater to multinationals that want to build.

But also make sure that the new facilities are not just taking from the grid, and will be providing something beneficial to the wider energy system.

Chris Collins, country president for Schneider Electric Ireland, says the move was good news for businesses.

He notes that despite the significant rise in data centre developments a few years ago, these slowed after Eirgrid’s moratorium was introduced.

This is because Dublin and the surrounding counties of Meath and Kildare are, by far, the most popular area in Ireland for data centres.

This is both to facilitate online financial transactions — the closer a data centre is to a population centre, the faster transactions are processed — and because of logistics, such as connections to Dublin Airport.

Over half of data centres in Ireland are located around the capital, meaning if there’s a problem with building here, it impacts the whole sector.

“With data centre buildouts now stalling, the CRU views the new measures as a positive step forward,” Collins tells Business Plus magazine.

“The CRU is asking that new data centres in Ireland incorporate a host of measures into their design to ensure grid stability — avoiding blackouts.”

Despite recent negative press over their energy consumption, Collins says data centres are a “key driver” of foreign investment and “remain fundamental to Ireland’s digital economy”.

“The measures may enable data centre operators already incorporating dispatchable or on-site generation into their designs to fast-track their developments, and begin to encourage major cloud or AI organisations to invest,” he adds.

However, a key sticking point for critics is around clean energy.

There had been a push to require data centres to supply themselves with renewable energy, to limit their negative contribution to Ireland’s greenhouse gas emissions.

This is set to become particularly important as Ireland nears the end of the decade, when it could face billions in EU fines if it does not sufficiently reduce its emissions.

The CRU proposal would see data centres being required to publish their carbon emissions and use of renewables.

However, law firm Mason Hayes & Curran points out that there is no hard requirement for the facilities to use clean energy under the watchdog’s new plan.

“A significant element of the proposed decision is that new data centres will not be subject to any minimum requirement as to the procurement of renewably sourced electricity,” the firm said in a blog post.

This aspect of the CRU’s suggested policy was harshly criticised by Hannah Daly, a University College Cork professor in sustainable energy.

“My own research has shown the immense pressure data centres are placing on Ireland’s climate obligations, an issue the CRU has determined is outside its legal remit,” she wrote on LinkedIn.

“The CRU has abdicated responsibility for setting policy in line with the climate law. But if the CRU doesn’t take responsibility, then what public body will?”

Despite the calls for restraint, businesses are stepping up their lobbying efforts to get more data centres built.

Digital Infrastructure Ireland recently announced a merger with another data centre and digital infrastructure group, Host in Ireland.

The combined body has said this was done as a “steady hand” was needed to “navigate through the inertia” that the sector is experiencing.

They have said this was necessary to ensure Ireland doesn’t miss out on a wave of investment from the AI boom, as tech companies look to build even more data centres to power ever expanding online usage.

But with Ireland still heavily reliant on burning fossil fuels to generate electricity, the emissions worries aren’t going away.

Critics are also increasingly pointing the finger at data centres for electricity price increases, due to the demand they place on the state’s electricity supply.

Ireland has the third-highest electricity prices in the EU.

The CRU’s proposals have attempted to find a halfway house between allowing new investment and getting a clearer understanding of data centre emissions and renewable energy use.

But the pushback from climate experts suggests many think the balance has yet to be found.