Time to rethink data centres?

Ireland’s data centre boom has faced significant criticism—and not without reason.

While efforts are underway to cut emissions in the agriculture and energy sectors through actions like installing solar panels, changing fertiliser use, building new wind and solar farms, data centres appear to operate relatively unchecked.

Data centres are facilities that house a large number of computer servers and IT infrastructure used to store, manage, and process vast amounts of data.

They are critical for the operation of modern digital services, including websites, cloud computing, online applications, data storage and artificial intelligence (AI).

With the age of AI and quantum computing upon us, global demand for data centres is expected to double over the next five years.

The Sustainable Energy Authority of Ireland has been clear about the pressure data centres will place on Ireland’s electricity demand, stating that their additional energy consumption is outstripping any new renewable supply added to the grid.

However, there is a counterargument about their role and importance to Ireland’s medium- and long-term economy.

It is up to the new Government and its ministers to engage in a level-headed, calm discussion about the role of data centres in Ireland’s future and the need for long-term strategic planning for their development.

The stats

Ireland has around 82 data centres in Ireland of varying sizes, with 14 under construction and planning approved for 40 more. They currently account for more than 21% of nation’s total electricity demand.

A 2024 Friends of the Earth study, written by UCC professor Hannah Daly, found that electricity demand from data centres has grown at an annual rate of 22.6% since 2015, compared to 0.4% for other sectors.

By 2027, data centres are projected to use more electricity than all households use today and could reach 30% by 2030.

Soaking up renewables

The report outlines that between 2017 and 2023, all additional wind energy generation in Ireland was absorbed by data centres.

As data centre demand has expanded at the same rate as renewable generation, renewables are not delivering net reductions in fossil fuel use in power generation, it states.

Gird connections and constraints are becoming a significant issue, so dozens of data centres have secured or are seeking connections to the natural gas network to produce power of their own as backup.

Emissions

Friends of the Earth has called for an immediate moratorium on the expansion of data centres in Ireland, warning that without decisive action, these facilities will continue to divert renewable energy towards meeting growing demand instead of displacing fossil fuels.

The group also stated that this would deepen Ireland’s reliance on fossil fuels, worsen the overshoot of the country’s carbon budget and pose significant threats to energy security.

With climate considerations now expected to be factored into planning decisions, this could create challenges for new data centre projects.

For instance, last year, Kildare County Council raised concerns about a proposed €1 billion, 180MW data centre campus by Herbata Ltd near Naas, siggesting that it conflicted with national policy.

The data centre was projected to emit 28.6 million tonnes of carbon dioxide equivalent over its lifetime, prompting the council to request further information before making a decision.

Economic benefit

Ireland’s position as a European data centre hub has attracted significant investment. Around €15 billion has been invested in data centres in Ireland, according to estimates.

Four companies—Amazon Web Services, Microsoft, Meta, and Google—account for €10 billion of this investment. Another nine companies account for the remaining €5 billion.

According to IDA Ireland, data centres make Ireland more attractive to tech giants due to its strategic connectivity.

As of 2022, IDA Ireland reports that data centre companies in Ireland directly employ around 16,000 people. Including contractors, however, this figure rises to 27,000.

This figure has likely risen since.

Last year, KPMG said that the clustering of data centres—Dublin being one of Europe’s five largest such hubs—acts as an economic catalyst, attracting a spectrum of businesses, suppliers and talent and without it, there is a risk of declining attractiveness to investment.

Data centres as offshore wind enablers

However, there are growing suggestions that data centres can be developed sustainably and may, in fact, play a crucial role in realising Ireland’s renewable energy potential, particularly in offshore wind.

In a report written by UK-based consultancy Baringa for the Cloud Infrastructure Ireland group, it argued that under government plans, offshore wind development must grow from the current 25 MW to 5 GW by 2030, then quadruple to 20 GW by 2040, and almost double further to 37 GW by 2050.

However, unless new sources of demand are in place, there is very likely to be an oversupply of electricity at times when wind output is high, the report said.

The report outlines that, if the State’s entire offshore wind targets are met, then the country could produce up to 55% more electricity than it needs.

That is even with expected growth in demand from the electrification of heat and transport, additional sources of demand such as green hydrogen production, existing data centres and bulk exports of electricity through interconnectors.

Dispatch-down

The report states that, if our 20 GW offshore target is met in 2040, the total electricity supply would be 136 TWh, 29% higher than the demand envisaged in EirGrid’s ‘Offshore Opportunity’ scenario.

For perspective, this surplus supply would be enough to meet the 2022 annual demand, or 7.3 million Irish households, roughly four times the number of households in that year.

The report argues that, if new demand does not materialise, large amounts of electricity will go unused and generators will face ‘dispatch-down’, which means they will be told to turn off generation.

This means renewable electricity being wasted rather than being put towards further value-creating activity.

However, by creating that new base load, data centres can provide a significant, stable source of demand for offshore wind power, helping to avoid large volumes of low-carbon electricity from being dispatched down and wasted.

Baringa’s modelling shows that by 2040, each additional 100 MW of data centre demand would avoid up to 347 GWh of dispatch-down, roughly equivalent to the annual output of 80 MW of offshore wind farm.

It’s true that Ireland hosts a disproportionately high number of data centres, and their energy consumption is significant.

However, in a digitally integrated world, data centres are an inevitability and critical in supporting the operations of the multinationals on which we heavily rely on for tax revenue.

These tax surpluses fund vital infrastructure and public services, and new initiatives like the Infrastructure, Climate and Nature Fund, which is set to benefit sectors such as farming. Retaining multinationals is in Ireland’s strategic interest.

Simply dismissing data centres as energy drains misses the bigger picture. The world is changing and so is our place in it. Ireland must balance climate goals with economic priorities.

Instead of opposing data centres outright, we should focus on bold, sustainable strategies for their development, integrating them with our growing offshore wind industry.

At the recent Wind Energy Ireland annual conference, issues like grid constraints and wind curtailment were high on the agenda.

It’s time to explore how data centres can be developed as anchor loads in Ireland to overcome grid challenges, unlock curtailed wind, maintain and grow our tax base and stay on track with our climate targets.