Data centres are playing an increasingly important part in the Republic’s expanding digital economy, with investment set to mushroom in the years ahead, especially given projected investments in artificial intelligence (AI).
The downside of data centre development, however, is that their operation consumes vast amounts of electricity. The CSO notes that the amount of metered electricity supplied to data centres rose from 5 per cent to 22 per cent of the State’s total output between 2015 and 2024, a figure that is set to rise significantly further in the years ahead, with speculation that it may reach more than a third of output within the next decade.
International research seems to bear this out. According to a 2025 report by the International Energy Agency entitled Energy & AI, data centre electricity consumption has grown by around 12 per cent a year worldwide since 2017 and is projected to double by 2030.
With enormous pressure on the domestic grid already while the Republic transitions from carbon to renewables, is it possible to facilitate data centre development while still meeting our climate action targets? Is there a trade-off that needs to made between the two?
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That debate landed in the High Court last month when three environmental groups challenged a decision made in December by the Commission for Regulation of Utilities (CRU) to allow new data centres to connect to the grid providing that after six years they supply as much electricity to the grid as they use themselves.
A further directive from the CRU was that 80 per cent of the electricity supplied by data centres should come from renewable sources, with the implication that the remaining 20 per cent could come from fossil fuels. This followed a period in which there was an effective pause on new data centres in the previous five years because of concerns about their energy needs.
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However, Friends of the Earth, Friends of the Environment and ClientEarth claimed that this latest directive by the CRU is a breach of domestic climate legislation and the EU Energy Efficiency Directive as it locks the State into an expansion of fossil-fuel emissions over the coming years.
Matt O’Neill, climate project lead at the Institute of International and European Affairs, believes the 80 per cent renewables target is a step change and a positive signal that data centre growth is being linked to clean energy, although he concedes that the six-year time frame could involve significant fossil fuel usage in the short term.
“We have to ask questions about what size, type and location of data centre makes sense for Ireland’s economy,” he says.
“We could end up with a technically manageable system that doesn’t match our climate and economic goals as a whole. It is generally accepted that we won’t meet our 2030 targets but 2040 is a different matter. We need to do the maths in relation to how data centres and climate change targets square up.”
O’Neill says every new data centre should be tied to clean generation. “Data centres should underwrite new wind and solar projects and new demand should be matched with supply. Another consideration is grid capacity. Big new loads should be aligned with where the grid can cope. Flexibility is also an issue. On-site or near-site generation and storage, and the ability to turn down demand at times of stress have to be part of the discussion.”
Tanya Cawley, managing director of AJ Products, agrees that the demands data centres are putting on the grid are unsustainable, given their forecast growth.
“I don’t think Ireland is equipped for it,” she says. “The danger is that we deplete the finite resources we have on this island and put too much pressure on the grid. Our renewable infrastructure is not developed enough and there are limitations in what we can do. It’s part of a broader problem we have in terms of trying to achieve growth without having the correct infrastructure in place.”
Cawley suggests that to get a proper insight we need to look overseas at best practice, especially focusing on how to achieve carbon offsets. Another solution she suggests is to take a firmer line on data centres generating their own sustainable energy solutions.
Irish data centre operators are certainly open to this idea and some have begun to use on-site microgrids in generating their own electricity.
One example of this is Pure Data Centres Group in Dublin which relies entirely on its own power generation on site so it does not need to be connected to the national grid. While it is currently run on natural gas, significantly, the centre also has the capacity to use sustainable fuels such as biomethane and hydrotreated vegetable oil, providing a clear example of sustainable development within the sector.
As O’Neill notes, all stakeholders have skin in the game and need to work together if growth and sustainability are to balanced. “It remains possible for Ireland to retain its position as a leading data centre hub, provided that policy, regulation and investment are aligned with this dual objective.”
