Senior officials have warned ministers that Ireland’s rapid growth in data centres is using up electricity capacity and adding to the risks around energy costs and climate targets.
In a confidential memo issued in November last year, the Secretary General at the Department of Public Enterprise, NDP Delivery and Reform (DPER) said that soaring electricity demand, “largely attributable to data centres” is forcing the State to spend heavily on new power generation and grid upgrades.
The memo noted that population growth and the shift to electric heating and transport also contribute to the issue.
The document stated that a single data centre can use as much electricity as Kilkenny and that demand from the sector is expected to rise to 30% of all national use by 2030, “placing upward pressure on electricity prices”.
The expansion of data centres has raised security of supply concerns, leading to “direct Government intervention in the electricity market” to purchase generation capacity on “an emergency, non-market basis…with associated costs to taxpayers and electricity bill payers,” the memo stated.
The memo, issued in November 2024, was obtained under Freedom of Information (FOI) by Sinn Féin MEP Lynn Boylan.
Details contained in it are revealed as the Commission for the Regulation of Utilities (CRU) is preparing to publish its final decision on a new large energy users connection policy. That is expected to lift a de facto ban on new connections of data centres to the national grid imposed in 2021.
A CRU draft decision, published earlier this year, proposes new criteria that would allow more data centres to connect by Eirgrid and ESB Networks, but only in areas where capacity is less constrained.
In practice, that is expected to shift new projects away from Dublin, where the grid is already under pressure.
Some experts, including Dr Paul Cuffe, Associate Professor of Electronic Engineering at University College Dublin (UCD), say any loosening of restrictions will come at a cost to consumers.
“Allowing in another cohort of big new data centres would require yet-further network upgrades to accommodate them. All that upgrade work needs to be paid for, and this will propagate through to electricity bills. There is no free lunch,” Dr Cuffe said.
Recently, the CRU published its latest price review, which sets out how much customers will pay to fund grid and network updates.
It estimated an increase of between 8% and 21% on domestic bills over the next five years. This means that urban customers will pay €404 – €454 on their bills per year, while rural customers will pay €520 to €584.
By contrast, large energy users, including data centres, can expect a 14% decrease in their bills even though data centres and technology companies are responsible for 89% of Eirgrid projected demand growth over the next decade.
Housing vs data centres?
The pressure on the grid is also affecting the provision of new housing, according to Conor O’Connell of the Construction Industry Federation.
“Housebuilders are reporting significant and ongoing delays while trying to secure an electricity connection for housing,” Mr O’Connell said.
“We are particularly aware of capacity constraints at substations in the east of the country. We understand various upgrade works are underway, but utility connection delays are a serious concern for housebuilders attempting to scale up their delivery of housing and illustrates the urgent need to invest in infrastructure,” he added.
Officials too have warned that rising demand is forcing difficult choices.
In May, Oonagh Buckley, Secretary General of the Department of the Environment, Climate and Communications, suggested the power demands of data centres and artificial intelligence could force the Government to choose between priorities such as housing and tech.
“Is it housing or is it AI?” she asked.
Taoiseach Micheál Martin quickly rejected that framing as “not true”.
However, tension between housing and data centres is already playing out locally in some areas.
Three years ago, councillors in South Dublin County Council (SDCC) voted to block further data centre expansion, warning it could squeeze power needed for large housing projects in Clonburris and Adamstown.
The decision was later overturned by then planning minister Peter Burke, who said it conflicted with national policy.
While there have been recent delays to some local housing developments, ESB Networks, which manages electricity connections said that “at present there is no backlog in connecting new housing developments in the area [of SDCC] due to capacity limits”.
The statement added that local network reinforcements are routinely required for housing which can “vary considerably, from minor upgrades to major works”.
However, Eirgrid, which manages the national grid, has raised concerns with the Department of Climate, Energy and the Environment that data centres have “saturated” Dublin’s electricity network.
It described west and north Dublin, where many data centres are located, as “extremely constrained”.
Eirgrid documents submitted to the department last November stated that a new bulk supply point in Castlebaggot, west Dublin had its capacity “exhausted by data centres before it was completed”.
A bulk supply point is a major power junction on the national grid that feeds electricity into ESB’s local distribution network.
The documents describe the Castlebaggot station, one of just seven serving the Greater Dublin Area, as “completely swamped” by “the sheer volume and energy density of data centre applications”.
As a result, Eirgrid said “major new reinforcements are needed to meet demand growth and the expansion of Dublin city into this region,” including at Adamstown and Clonburris.
Potential solutions?
Some within the data centre industry reject the idea that it is competing with housing for power.
Peter Lantry, who is Managing Director for Equinix Ireland, which operates several data centres in Dublin including one of the largest at Grange Castle Business Park in west Dublin, said it is not a zero-sum game between housing and data centres, which he describes as “critical national infrastructure” that underpins Ireland’s economic success.
Equinix Ireland said that over 95% of Ireland’s internet traffic passes through its facilities, including its data centre in Grange Castle.
The much larger campuses operated by Microsoft and Google nearby deliver cloud services to domestic and international clients, helping to make Ireland the OECD’s top exporter of Information and Communications Technology (ICT) services.
Mr Lantry said there are ways to address concerns about competition between data centres and housing developments over access to the grid.
One solution, he said, is to cut a centre’s grid use at peak times through “demand flexibility” – a process where large energy users reduce or shift their electricity consumption when the system is under strain.
He also proposes to introduction of district heating, where excess heat from data centres could be redirected to nearby housing developments and used to provide hot water.
But such initiatives are still some way off. And with grid constraints already acute, Dr Paul Cuffe of UCD warns.
“The fear now is that Eirgrid might soon be forced to decline or delay requests from ESB Networks for housing or other purposes,” he said.
Impact on climate targets
Another concern is the impact of data centre expansion on the State’s ability to meet 2030 climate targets. Failure to cut greenhouse gas emissions could leave Ireland facing fines of up to €20 billion.
The DPER memo released under FOI describes how increased electricity demand “is placing upward pressure on our greenhouse gas emissions, making it more difficult to meet our renewable energy and climate targets, and posing a risk to the Exchequer”.
In research commissioned by environmental group Friends of the Earth, Professor of Sustainable Energy at University College Cork (UCC) Hannah Daly concluded that data centres “current growth trends risk locking Ireland into higher emissions”.
Prof Daly’s research highlights how one larger data centre is projected to produce 450,000 tonnes of CO2 annually, “equivalent to 200,000 fossil fuel cars”.
She said this is undermining efforts to increase the proportion of renewable energy powering the national grid.
“We are simply funding renewables to meet new huge sources of energy demand that data centres represent. It’s like running up a down-moving escalator, growing renewables, but not cutting fossil fuels,” Prof Daly said.
An Oireachtas library research paper titled Data Centres and Energy, published last year, reported that solar power’s boom year in 2023 where 439Gwh was added to the grid, “was immediately ‘used up’ by the single year’s increase in data centre electricity consumption”.
Peter Lantry said operators like Equinix Ireland are trying to address that by adding more renewables directly to the system, through so-called Corporate Power Purchase Agreements with wind and solar providers.
“If we’re given the ability to grid connect and build out more capacity for our customers, we will be buying and paying for wind farms or solar farms onshore and offshore, to supply more power than we would use on our own sites to the Irish grid,” Mr Lantry said.
But Prof Daly said past evidence casts doubt on those assurances.
“There’s a lack of evidence to say how much of the growth in data centres is funded by these additional renewables. My research suggests that over the last number of years, it’s been less than 20% of their growth.”
In addition, about 16 large scale data centres rely on gas for their power, which is not currently included in the projections about how much emissions data centres cause.
It’s anticipated that the debate about data centres will heat up politically as the final CRU decision on its new connections policy to large energy users, is due within weeks of the Dail resuming.
The decision, if it reflects its draft proposal in February, indicates that grid connections will still be conditional on “whether it is a constrained or unconstrained region of the electricity network”.
That means that we are likely to see fewer new connections around Dublin, but connections elsewhere in the country.
But it is not just there that the debate will continue, the upcoming CRU decision is likely heading for legal argument in the courts.
Friends of the Irish Environment are preparing to judicially review any CRU decision that has the effect of allowing more data centres potentially in breach of our legally binding climate action targets.
In a statement to Prime Time, the Department of Climate, Energy and the Environment said data centres were “a core infrastructure enabler of a technology-rich, innovative economy” and acknowledged “the significant challenge of finding a balanced approach to facilitating additional demand for energy by data centres while also ensuring the competitiveness, sustainability and security of supply of our energy system”.
Article Source – Government warned of rising household bills as data centres strain grid
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