Few pieces of infrastructure have become as contentious in Ireland as data centres. To supporters, they are critical infrastructure underpinning cloud computing, artificial intelligence and the multinational technology sector. To critics, their growing electricity demand exposes tensions between Ireland’s industrial policy and climate ambitions.
The question is, how many can the State accommodate, and under what conditions?
Data centres form an important part of Ireland’s foreign direct investment proposition, says Matt Kennedy, global head of client transformation at IDA Ireland.
“Ireland’s FDI performance over the past year demonstrates that the country remains highly competitive, but that competitiveness is increasingly shaped by the availability of enabling infrastructure across energy, digital connectivity, talent and innovation.”
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IDA Ireland’s Adapt Intelligently strategy identifies digitalisation and sustainability as mutually reinforcing growth drivers, particularly in sectors such as AI, cloud services, semiconductors, advanced manufacturing, life sciences and financial services.
Kennedy acknowledges that data centres are large energy users and says their development must align with Ireland’s climate, energy security and infrastructure objectives.
“The issue is therefore not whether Ireland should pursue unlimited growth, but whether Ireland can support strategically important digital infrastructure in a planned, sustainable and regionally balanced way.”
Patrick Brodie, assistant professor in UCD’s School of Information and Communications Studies, takes a different view. “The importance of data centres to Ireland’s economy is drastically overstated,” he says.
Brodie points to the government-commissioned KPMG report The Value of Data Centres to Ireland, which argued that 876,000 jobs, or 32 per cent of national employment, were dependent on the sector. “This basically asserts that a huge proportion of jobs that require frequent use of cloud services are dependent on hyperscale data centres being located in Ireland – an irresponsible claim that was widely called out in the media.”
Brodie claims data centres are a symptom of the privileging of digital and industrial policies that support immense wealth concentration and the disproportionate allocation of ecological resources towards one sector of the economy.
“Developmental trade-offs assume that there is also a notable proportion of jobs supported. However, as the KPMG report shows, direct employment is only in the order of a few thousand jobs, and most are exhausted after the construction phase.”
Technology can make a meaningful difference to the environmental footprint of data centres, says Grit Young, EY Ireland technology, media and entertainment, and telecommunications industry leader.
“More efficient equipment, better cooling and smarter management of workloads can all reduce energy and water use,” she says. “There is also scope to remove waste, such as servers that consume electricity while doing very little. Innovation needs to be matched by cleaner energy and continued investment in the grid.”
For Ireland, she says, developing offshore wind is particularly important, with big technology companies able to provide long-term demand through power purchase agreements.
Brodie says focusing on efficiency risks overlooking how resources and economic power are distributed. “The global cloud market is dominated by three US monopolies, all of whom have major data centre locations in Ireland: Amazon Web Services, Google, and Microsoft together control around 65 per cent of the global market share.”
These tech hyperscalers, he says, account for a large proportion of energy and water demand in Ireland, including 23 per cent of our electricity. “These are resources that are being directed towards the profits of just a few companies. This is not to mention research showing that data centres’ electricity usage will be directly responsible for Ireland missing its binding climate targets.”
Brodie argues that policy is focused on adapting Ireland’s infrastructure to accommodate continued expansion by large technology companies.
“The problem is thus a shortsighted and reactive industrial policy, which relies on large-scale industrial investment by US FDI companies.”
Kennedy rejects the idea that Ireland faces a straightforward choice between economic development and environmental responsibility.
“Ireland needs a more integrated discussion about the total energy system, the pace of renewable deployment, grid reinforcement, demand flexibility and the role of digital infrastructure in supporting productivity and decarbonisation across the economy.”
Data centres have substantial electricity requirements, he acknowledges, but support services across the economy, including cloud computing, AI, public-sector digital services, financial services and enterprise software.
Digitalisation can also contribute to decarbonisation through smarter grids, improved demand forecasting, more efficient industrial processes and environmental monitoring.
“The priority should be to move from an ad hoc debate about individual electricity users to a plan-led approach that balances economic opportunity, climate commitments, affordability, and security of supply.”
In Young’s view, rather than approaching data centre development on an individual country basis, Ireland “should link into a collective European strategy on digital infrastructure and AI”.
Europe cannot afford to fall too far behind in AI development, she says. Instead, it should identify the most appropriate locations for digital infrastructure based on climate, energy and technological considerations.
Kennedy believes a complete halt to further large-scale data centres would send a significant signal to international investors. “A risk is that investors would interpret it as a constraint on Ireland’s ability to provide the digital and energy infrastructure required for long-term growth.”
The consequences, he argues, could extend to other technology-intensive industries and weaken Ireland’s proposition for FDI.
“The more balanced approach is to ensure that policy and infrastructure keep pace with the urgent need for decarbonisation, while enabling strategically important investment where it is aligned with renewable energy, grid capacity, regional development and national competitiveness.”
