Do Data Centres in Ireland Raise the Price of Electricity?

By Cormac Breen

Content Manager

According to the CSO 2023 report into metered electricity consumption in Ireland, the percentage of total electricity consumption used by data centres rose from 5% in 2015 to 21% in 2023 representing a 320% increase. This significant increase in consumption demands on the Irish electricity network has in part, along with other factors, contributed to rising prices for domestic electricity customers. There are 82 data centres in Ireland, with an additional 14 centres under construction, with planning approval granted for an additional 40 centres.

What are Data Centres in Ireland?

Data centres are large warehouses filled with servers, storage devices, and networking equipment that store, process, and distribute data.

Similar to an external hard-drive, USB stick or even an old CD or floppy disk, data centres are essentially large storage devices for information from our online activities.

For every WhatsApp message we send, every time we use our banking app, scroll social media, stream a film on Netflix, a piece of information is produced that must be stored.

Given how much of our daily lives have moved online, data centres have become more and more important to store all of this information.

Why Are There So Many Data Centres in Ireland?

There are currently 82 data centres in Ireland, with an additional 14 centres under construction, and planning approval has been granted for an additional 40 centres, representing a 42% growth in the coming years.

Ireland, and its energy market, have become an attractive location for data centres for several reasons:

• Low corporate tax
  Ireland has one of the lowest corporate tax rates in the EU at 12.5% while the average across other EU nations is 21.5% making data centres more profitable here.
• Strong data protection laws
  Ireland has strong data protection laws backed by EU regulations, making it a secure place to store huge amounts of information.
• Educated workforce
  Data centres need highly skilled and educated workers to run and maintain them, with Ireland's high percentage of graduates providing a workfare.
• Climate
  Data centres produce a huge amount of heat and need to be cooled continuously, so Ireland's cool, temperate climate is an ideal location.
• Strategic geographical location between the US and Europe
  Given Ireland's position between the EU and the US, along with being an English-speaking country within the EU, it is a strategic location for many large tech companies to build data centres.

Are Data Centres Increasing the Price of Electricity?

While data centres are not solely responsible for the increase in electricity prices in Ireland over the last 10 years, they do contribute in some part to the situation.

Data centres are what as known as 'energy hogs' and consume huge amounts of energy while operating.

The heat produced by them requires the servers to be continually cooled as a result of the heat they generate. This combination of energy consumption and cooling results in data centres drawing on a huge amount of energy from the national grid.

According to the CSO 2023 report into metered electricity consumption in Ireland, the percentage of total electricity consumption used by data centres rose from 5% in 2015 to 21% in 2023 representing a 320% increase.

This level of consumption places a huge demand on the electricity network and, in turn, increases the cost of electricity for domestic users,

In fact, in 2023, data centres accounted for more electricity consumption than urban homes, 19% and rural homes, 10% with Eirgrid estimating that this will increase in the coming years to almost 30%.

Are Data Centres Putting Pressure on the Electricity Grid?

As the number of data centres increases, so too does the demand for electricity from the grid, which puts urban and rural homeowners at risk in the event of power outages.

The number of amber alerts, where grid operators signal that there is not enough energy in reserve should there be an issue in the power system, has increased since 2021 with 8 amber alerts signalled in 2022 alone.

Before this, there were only 13 amber alerts between 2010 and 2019 highlighting the increased pressure the Irish power supply network has come under in the last 5 years.

With the number of data centres set to increase, the risk to power supply for key infrastructure such as hospitals and banking systems is coming under increasing threat if the power network fails as a result of the demands put upon it.

The Irish government has committed to investing over €3 billion in the Ireland and Northern Ireland grid between 2022 and 2030 in a bid to upgrade the system and help it cope with the increasing demand for electricity from data centres.

Do Data Centres in Ireland Impact the Environment?

Given the large amount of energy data centres are currently consuming in Ireland, they are having a direct impact on Ireland's level of carbon emissions and also its environment.

Some experts estimate data centres are responsible for almost 2% of Ireland's annual carbon emissions. This is due mainly to the amount of electricity they consume, as well as the use of on-site fossil fuel powered generators.

In 2023, 40.7% of Ireland's electricity supply came from renewable energy, but with the number of data centres set to increase, there is only so much electricity that renewables can supply.

While Ireland is making improvements to the amount of renewable energy entering the national grid, we are still heavily reliant on fossil fuel imports, in 2023, 82.6% of Ireland's energy came from fossil fuels, and with data centres consuming more and more, more fossil fuel will be needed to maintain a healthy supply.

If Ireland is to achieve its Climate Action Plan goals for 2030, 80% of the electricity consumed in Ireland must come from renewable sources.

Are the Government Regulating Data Centres in Ireland?

The challenges posed to the Irish power network by the increase in numbers of data centres has led the Irish government to redefine the role of data centres in Ireland.

The revised statement seeks to outline the principles for data centre development in Ireland, including:

1. Ensure Sustainable Development
   Prioritize data centres that make efficient use of the electricity grid and contribute to Ireland's renewable energy goals.
2. Maximize Economic Benefits
   Encourage data centres that generate strong economic activity and employment.
3. Grid Constraints
   Due to grid capacity limitations, there is a de facto moratorium on new data centre developments in the Dublin area until 2028.
4. Focus on Sustainability
   The government emphasizes the need for data centres to be powered by renewable energy sources and to implement energy-efficient technologies.

Despite this, the government has not suspended the development of new data centres in other parts of Ireland outside Dublin and will continue to have to continue efforts to balance the positive economic benefits of data centres with their environmental impact and how this affects Ireland's climate goals for the future.