Digital Infrastructure Ireland, an industry lobby group, has warned that Government inaction is threatening billions in potential data centre investment in this country because of the parlous state of energy infrastructure.
Ireland is a small, open economy that is heavily reliant on foreign direct investment. It does not augur well for future growth when an industry lobby group is claiming that billions of investment is being lost to the state because of inadequate infrastructure.
The Government certainly needs to develop a coherent policy on data centres, but a number of factors must be taken into consideration.
Last year, data centres accounted for an estimated 25 per cent of Ireland’s electricity usage, compared to an EU average of 3.1 per cent. The Netherlands was the next highest on 7 per cent, with the UK and Germany on 4 per cent.
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Energy demand from data centres is projected to increase by up to 165 per cent by the end of the decade due to the rise of artificial intelligence.
The Government has announced a € 3.5bn investment in energy infrastructure up to 2030, which would address some bottlenecks currently putting a strain on electricity supply.
The State also has a very ambitious offshore wind energy target of generating 20 GW of electricity by 2040, which is enough to supply 15 million homes. During the summer, Minister for Energy Darragh O’Brien introduced a Private Wires Act that will enable data centres to meet their energy needs through investment in private sector renewable energy projects. In theory, this could enable the growth of data centres without putting pressure on national supply.
As it stands, the Government must balance the demands posed by data centres on the national grid with the needs of domestic users and the broader economy. Based on current capacity there is little room for further connections in the short to medium term.
If the proposed upgrade to energy infrastructure and the wind energy targets come to pass, then, over time, Ireland would be able to accommodate more data centres. But a hard-nosed assessment is required of how much the sector should be allowed grow.
These facilities are a crucial component of the tech ecosystem in which Ireland is deeply embedded. But data centres are also a source of heavy CO2 emissions and are putting a strain on Ireland’s efforts to meet its legally mandated EU 2030 climate targets. Failure to meet these targets will result in potential fines of up to €26bn, which more than offsets any economic benefits of data centres.
The Government must develop a policy on data centres, but it must be one that weighs up their overall impact on the climate and the economy.
