As global electricity grids face strains from the booming power demands of artificial intelligence (AI), Ireland might hold valuable lessons on grappling with the issue.
It had been a European data centre pioneer. But in 2021, concerns about how power-guzzling the industry had become spurred Irish regulators to impose what was in effect a moratorium on new projects. More than a fifth of the country’s electricity is gobbled up by data centres, a share set to rise to nearly a third by 2034.
Ireland is now seeking to break the lock on new projects. The Commission for Regulation of Utilities (CRU) said in December that new data centres could go ahead, arguing they are “a core infrastructure enabler of a technology-rich, innovative economy”. But new projects will be required by the CRU to have at least 80 per cent of their annual power demands met through additional generation by renewable electricity projects in Ireland within six years of them starting up.
A lot of other countries will be watching to see if this works. Maurice Mortell, chair of Digital Infrastructure Ireland, an industry body, sees Ireland as “sort of the canary in the coal mine” for this power crunch.
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Amsterdam likewise suffered from a “bottleneck” in energy demand from a boom in data centres and put a moratorium on new ones in 2019. Frankfurt – another hub – imposed new regulations on their development in 2022. Experts say similar fates await other hubs as AI use explodes. Power demand is outstripping supply in the US and Asia too and consultancy McKinsey believes up to a third of global data centre demand is unmet.
Ireland has an economic incentive to keep data centre investment flowing: tech has become a pillar of the economy, supplying much of its booming corporation tax revenues and accounting for 13 per cent of its GDP.
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But Ireland’s new data centre pathway is challenging. Demand cannot yet be met by renewables alone. Ireland’s goal is to have 80 per cent of its power supply generated from renewables by 2030, but in 2024, 42 per cent still came from natural gas.
UK-based Pure Data Centres Group and its power systems partner AVK-SEG offered one blueprint for a potential solution when it launched Europe’s first off-grid data centre microgrid in Dublin last week. Energy self-sufficiency – tick. Ability to run 100 per cent on ecological fuels – double tick.
For Gary Wojtaszek, Pure’s new executive chair and interim chief executive, the Dublin 110MW microgrid is a “creative solution”. The company, backed by US-based Oaktree Capital Management, says the power the site will be able to generate will ultimately be enough for 110,000 homes. “Europe has been energy constrained for a long time. I see this as something that’s really going to explode everywhere.”
Ben Pritchard, chief executive of AVK-SEG, said five other microgrids were being built in Dublin and his company was working on three of them. “The thing is,” he said, “data won’t wait.”
But cost can be an issue. Biomethane – which the Pure microgrid can run on (with hydrogenated vegetable oil as a backup) – can be more expensive than natural gas, making it more difficult to justify in economic terms running exclusively on renewables.
Experts say this means data centres will still want grid connections to access natural gas at scale, particularly to cope with swings in demand. This is likely to mean some degree of reliance on fossil fuels. One senior data centre executive also told me that requirements to have some of the additional power generated locally would make projects “trickier than people might like to admit, in the Dublin metro area at least”.
At the end of this month, grid operator EirGrid and network operator ESB are expected to flesh out how the new CRU rules will be applied.
Another option is green energy parks combining renewables generation and data centres on the same site, says Paul O’Donnell, investment manager at Schroders Greencoat. Its Greencoat Renewables vehicle this month invested in its first such site, in Drogheda, Co Louth.
In its policy paper in December, CRU highlighted the potential need for about 5.8GW additional demand capacity for the data centre sector in Ireland in the medium term.
O’Donnell says even if that is scaled back to 2GW-3GW in new data centres, that would represent a step up in investment in new renewable projects. “That’s the big economic investment Ireland is going to unlock,” he says. – Copyright The Financial Times Limited 2026
