Economic benefits at risk from data centre uncertainty – DII

Failure to address the policy constraints around data centres in Ireland will put the country at risk of missing economic benefits of next generation technologies, an industry body has warned.

Digital Infrastructure Ireland (DII), which is made up of ten data centre developers and operators here, has called for the Government to set up a working group that would bring the State, data centre industry and regulators together to address issues related to the sector.

The group argues that over the past three years, concerns around energy, sustainability and land use have severely limited data centre development and investment in this country.

“Ireland needs to commit to certainty on its data centre policy quickly, otherwise it will miss the next phase of investment into digital developments, having lost the first wave of it over the last two years,” said Peter Lantry, chairperson of DII.

“Without swift and direct action on this uncertainty, Ireland’s position as a welcoming hub for foreign direct investment and a global technology leader is at risk, just as investment in AI is scaling around the world.”

“If the uncertainty continues, particularly in the Dublin metro area, it will reshape Ireland’s standing as a choice destination for prominent global projects.”

Three years ago, an effective moratorium was placed on the connection of further new data centres in the Dublin region to the national electricity grid until 2028.

This was because of capacity constraints in the grid, caused in part by the the growth in recent years in the number of data centres and other large energy users, and concerns about the associated carbon emissions.

New data centres requesting connection to the transmission system are currently reviewed on a case-by-case basis.

A number of criteria are being considered including the location of the centre and whether the grid capacity is constrained there or not, the ability of the centre to generate its own energy onsite and its ability to be flexible in its demand.

Gas Networks Ireland has also not been connecting new data centres to the gas distribution system for the last two years, unless they had previously been approved for connection.

Chief Executive of Friends of the Earth Ireland Oisín Coghlan said Ireland has gone from having 5% of its electricity being used for data centres in 2015, to 18% in 2022.

“That’s as much as all urban homes together, data centres now use as much as that, and whatever happens, we’re already on track with contracts and connections lined up to be at 30% of all our electricity in Ireland will be used for data centres by 2030.

“That’s where in the rest of Europe the average is 3% and the next highest country is Netherlands on 5%.

“We are an outlier, we’ve done more than any other country,” he said.

He told RTÉ’s Drivetime that Ireland had by cross-party agreement adopted limits on its pollution in line with the Paris Accord and its European agreements and data centres are “gobbling up all our renewable energy which we need to heat our homes.”

Mr Coghlan said data centre services are storing “our photographs or our notes”.

“It’s being used more for cryptocurrency, for AI, and for the algorithms that power the ads that we see, they’re mining our data to send us more ads.

“In a world where we’re constrained by how much pollution we have, we have to look carefully at whether we need all of this here, and whether we can afford to have it all here”.

Mr Coghlan said data centres have become a threat to Ireland’s energy security because of the country’s “very tight grid, very tight supply of electricity during the winter” and “can’t afford to connect more data centres on that basis.”

Minister for the Environment Eamon Ryan has said new data centres will not be connected to the electricity or gas grids until they stop relying on fossil fuels and reduce their carbon emissions.

But DII claims there is also a lack of clarity on connection agreement policy for large energy users and Ireland’s demand strategy.

“Billions of euros are expected to be invested in AI and data centres in Ireland over the next several years,” Mr Lantry said.

“Failure to act on issues facing digital infrastructure in a timely manner puts Ireland’s ability to harness this wave of investment at risk.”

DII also claims that the current policy climate does not provide the necessary certainty for the industry to commit to investing in renewable energy projects at any meaningful scale.

But the Minister for the Environment has said a balance can be struck on data centres.

Minister Eamon Ryan

Speaking in Galway today, Eamon Ryan said there will not be a future unless it is sustainable, low carbon, renewable and fits in with our electricity grid.

Mr Ryan acknowledged that there are challenges on the grid, but said those can be overcome

“We will build new data centres but they will be zero carbon,” he said.

He added that in doing that Ireland will have real expertise to sell to the rest of the world.

Mr Ryan said we can not develop industries which are not adapting and taking into account climate change.

“No one gets an opt out, no one says oh, well we are exempt,” he said.

“And I think the industry know that,” he added.

Among the members of the DII alliance are CyrusOne, Digital Realty, EdgeConneX, EngineNode, Equinix, K2, Keppel DC REIT, Pure DC, T5 and Vantage Data Centers.

So far they have invested €10bn in the economy and they claim they would invest a further €3bn in the Greater Dublin Area in future years if the policy climate permitted them to do so.

The group said it is committed to advancing technology and sustainability and addressing industry challenges.

It was recently reported that inward investment agency, IDA Ireland, had called last summer for clarification without further delay about the rules for data centres seeking gas connections amid damage to Ireland’s credibility around the issue.