Last week, Government published its new data centre industry plan, otherwise known as LEAP, or Large Energy User Action Plan. This plan has been lobbied for and anticipated by the industry in a country where 22 per cent of all metered electricity is used by data centres, rising to around 50 per cent in Dublin.
Until a few years ago, Government policy on data centres was not LEAP, but LTAI (Let Them At It). Then reality hit. The subsequent so-called moratorium on data centres was not a pause on construction, but on connections to the electricity grid. Even so, one of the largest projects still went ahead, Echelon’s data centre in Wicklow.
Ironically, the data centre industry became a victim of the very pathologies within our political system of stasis, ad hoc planning and myopia, which led to the Irish data centre boom in the first place. That boom was catalysed by a 2018 policy statement by Heather Humphreys, then minister for business, enterprise and innovation, bowing it appeared to the data centre industry’s desires.
Once the electricity grid was inevitably squeezed by unfettered development, and the alarms sounded, the Government was cornered. Now it is trying to back itself out of that corner.
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Four things in LEAP stick out. “Green energy parks” are cited as the future, essentially a marketing term for locating data centres in sites close or adjacent to solar and wind farms, as Amazon is doing with Bord na Móna in Offaly on former peatland. There’s the intention to “unlock regional economic opportunities”, meaning more data centres in rural Ireland.
The development of hyperscale data centres in rural parts of the US is facing backlash regarding water availability, land use, negative environmental consequences and rising household electricity bills.
There is a vigorous nod to embedding data centre industry lobbying further in Government decisions through establishing a “data centre sector round-table”. This is a forum for the data centre industry, Government departments and energy system operators to “receive sector feedback and escalate challenges”.
Legislating for private wires policy is in the actions section of the plan. Realistically, restarting Ireland’s data centre boom cannot happen without it. It marks a huge change in Ireland’s electricity infrastructure policy, where data centre developers will build private infrastructure to circumvent the grid, and connect directly to private energy sources. Government intends to legislate in 2026. This will have a large knock-on effect on everything from agricultural land to the development and ownership of large-scale renewable energy projects.
What represents the largest industrial roll-out this country has ever seen, in terms of pace, scale and energy usage, occurred relatively quietly. It can seem as though what Karen Hao calls the “shadow metropolises” of data centres in her excellent book, Empire of AI, appeared almost overnight across the capital’s traffic-clogged commuter belt. Now, Government wants more.
What’s missing from the rhetoric – the Government mantra that data centres underpin Big Tech foreign direct investment jobs in Ireland – is the actual cost benefit to our society, and who ends up paying for the data centre boom.
In 2023, an Oireachtas committee heard that residential electricity consumers had €600 million collectively added to their bills – €50 million a year over 12 years – to cut large energy user (LEU) bills through a policy called the LEU rebalancing subvention. If you were a household paying electricity between 2010 and 2022, you paid €600 to subsidise LEU electricity bills, and the biggest users of electricity are of course data centres. A perhaps related reality is that Irish households pay among the highest electricity rates across the EU.
Data centres also benefit from the Accelerated Capital Allowance (ACA) for qualifying plant and machinery costs. Companies such as KPMG work to maximise such claims, noting “we normally see a qualifying percentage range of between 60-80 per cent for capital allowances purposes”. While a data centre building structure does not qualify, a lot of the fit-out may: servers, racking (structures servers are contained within), operating equipment, heating, ventilation and air conditioning installations, heat recovery and cooling machinery, and infrastructure for the transportation of electricity, water and heat.
ACAs allow a company paying corporation tax to deduct the full cost of equipment from their profits in the year of purchase. This translates to almost magic spikes in profits for data centre companies. In 2024, the Irish subsidiary of the US data centre company CyrusOne paid out €24.6 million to its Dutch parent company. Last year the Business Post reported that these bumper profits allowed the group’s Irish holding company to increase its pay to directors by more than 40 per cent to almost €800,000. In 2024, the revenue of CyrusOne Irish Datacentres Holdings Limited increased by 15 per cent. Why this remarkable spike in profit? Accelerated Capital Allowances.
LEAP benefits the data centre industry because that’s what it is designed to do. It is unclear, however, what the benefit to the State and the public really is, especially when Ireland may be on the hook for up to €28 billion in fines from the European Union when we fail to meet our climate obligations.
Rapid and large investment in electricity infrastructure is in part catalysed by the demands of data centres, which somebody has to pay for. In other countries, the cost benefit of data centres is increasingly a matter of public debate, and developments are often resisted. In Ireland, with LEAP, they’re back in business.
