Data centre growth must serve rather than “complicate” wider societal and economic needs, as well as electricity system security, a major review of Ireland’s energy system has found.
The report on Ireland’s energy security was developed by the Department of the Environment with the International Energy Agency.
It outlines that rapid growth in demand for electricity is a “defining characteristic” of the next decade, with demand from data centres projected to double by 2035, and total demand across the system also doubling between 2023 and 2035.
The IEA developed a model - the adapted transition pathway - to illustrate how economic, environmental and social goals are advanced through the electricity sector.
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The paper outlines that data centre capacity is anticipated to consume at least 30 per cent of the country’s power supply in 2030, and by 2035 “it is the sector with the highest electricity consumption in the adapted transition pathway”.
The report will be launched by Minister for the Environment Darragh O’Brien at the IEA headquarters.
It notes that while there is an expectation that technological advancements will reduce the intensity of how data centres consume electricity, these effects remain uncertain while “accelerated growth poses system planning and security challenges”.
It outlines that data centres are a key contributor to economic growth in the State but that “rapidly rising power demand must be accommodated in a manner that serves - rather than complicates - both system security and wider societal and economic needs.”
Under new rules published this month by the Commission for Regulation of Utilities, data centres will have to meet at least 80 per cent of their annual energy demand with additional renewable electricity projects generating in the Republic of Ireland.
The report also flags the impact of growth in demand for electricity in housing and transport - outlining that while data centre growth is significant, it also tends to take place in a few more centralised locations which allows for more effective planning.
But it says that switching to electric cars or residential heat systems powered by electricity is driven by more decisions from a greater number of individuals “involving less predictable personal preferences”.
While there should be clarity in the run-in to 2035, “uncertainty about load growth entails risks of over or under-investment in capacity and makes electricity planning more difficult,” the report finds.
Renewable energy is projected to supply most of Ireland’s electricity by 2035, with wind power providing over 70 per cent of the total in the IEA model. That would involve almost doubling onshore wind deployment in the next five years and installing 1.3 gigawatts of offshore wind power- effectively growing Ireland’soffshore sector from almost nothing.
The report is complimentary of the high levels of wind power Ireland has managed to facilitate on its electricity grid, with one-third of electricity coming from wind in 2024. This, it says, is four times the global average.
It says that replacing oil and gas based boilers and vehicles with electric alternatives could cut direct fossil fuel imports by 38 per cent and lower annual import bills by €2.8 billion.
“However, significant upfront costs, high electricity prices compared with fossil fuels and grid capacity constraints remain barriers,” it states.
However, amid increasing demand - including from data centres - the target of meeting 80 per cent of electricity demand from renewables by 2030 would not be met without faster progress.
