Data centres are playing a key role in Ireland’s bid to reduce its carbon footprint, as well as bringing invaluable high-volume employment, according to a report by Host in Ireland.
An industry-led initiative founded in 2014 to promote Ireland as an optimum location to host data activities in, Host in Ireland notes that Ireland is set to see 34 new data centres are now likely to be operational in the next six years.
This is in addition to the 53 data centres which are currently active. With eight new data centres under construction, and 26 with planning approval in place, the value of the projects is expected to deliver €4.5bn in inward investment to the Irish economy over a six-year period.
Garry Connolly, president of Host In Ireland, said: “What is most encouraging is that this year we have seen several large-scale investments in the renewable energy sector from leading data centre operators. We expect these non-subsidised investments to continue.
“Sustainability is a key concern for all industries really, and that is certainly true of data centres.
"Companies are focused on this area because consumers are very aware of protecting the environment, and younger people are particularly aware.
“Ireland has a great pedigree in data centres. We’ve been in the area of data storage for 50 years. We were huge exporters of CD Roms and floppy discs, now we’re exporting data centre expertise.
"You meet Irish people developing data centres all over the world; you could be in Copenhagen, but you meet the same people you’d meet in Blanchardstown.”
Mr Connolly says that one key reason for Ireland’s success in exporting this expertise is the commitment to sustainability.
The sector has a significant focus upon environmental impacts. Around €1bn is currently being invested in developing new data centres, with eight new centres under construction, and with a further €3.5bn with planning permission expected to be completed by 2025.
Mr Connolly said: “We have seen in recent times several large scale investments in the renewable energy sector from leading data centre operators such as Amazon and Microsoft. We expect these type of non-subsidised investments to continue.
"Amazon only recently announced Cork as the location for a 23Mw wind-farm development on top of an earlier investment in April this year in Donegal.
“Wind power already produces 37% of electricity on our grid and has seen a 100% increase in capacity since 2012. The data centre industry globally has progressively moved to a renewable first model and the industry in Ireland is no different.
"As recognition of this reality, we welcomed the Irish Government’s commitment last quarter to achieve a 70% renewable energy target by 2030 but the government cannot drive that agenda alone.”
Data centres are a central part of Ireland’s soaring ICT sector, which contributes around €70bn of Ireland’s total annual €280bn GDP.
This means the sector’s economic contribution is over four times the size of agriculture, and getting closer to pharma each year.
“We decided to launch Host in Ireland five years ago to make sure that the country was sending out a simple understandable message about the reasons to host a data centre in Ireland,” said Garry Connolly.
“We highlighted all the usual positives about corporation tax, the strong data privacy laws, the talent pool and all the other factors that feed into a strong FDI message.
“We wanted to be sure that the sector had a strong voice to attract FDI. It’s one thing attracting big players like Amazon and Google to bring data here, but there are hundreds of thousands of others operating in data. We started with five companies, and now we have 22.
“They’ve come together to tell a unified FDI story. We call it ‘co-opetition’. They’re in competition with each other, but they’re also co-operating with one another.
"Data is a huge global industry, and we’re working to ensure Ireland is seen as an optimum place in which to locate for this sector. Of course, people already see that we have pedigree in this area.
Meanwhile, another positive from the Host in Ireland report is the fact that Brexit has not affected momentum in the data centre industry.
Annual Investment in data centres has reached €1.3bn on an annual basis. Cumulative investment in the data centre sector up to 2023 is ex €11bn.
The report also highlights Dublin South West as the largest cluster of data centres in Ireland with 14 active data centres. Many of these are partners of Host in Ireland.
Host in Ireland consists of 22 data hosting partners that collaborate to promote Ireland as the data hosting centre of Europe.
Its executive committee consists of 22 C-level executives from partner companies including Equinix, Interxion, Siemens and Schneider Electric.
“In many ways, the economic benefits to data centres are now four-pronged,” he said.
“Direct investment in construction-related activity is now set to top €11.3bn by 2023. Irish construction exports have increased significantly in recent years to €2bn and our expertise in data centre construction is playing a positive part in that growth, according to the Construction Industry Federation.”
Meanwhile, the value of ICT exports has grown to €69.8bn according to CSO figures in 2017.
In addition, a recent IDA/Grant Thornton report from 2018 highlighted a multiplier effect of three times that of what has invested annually in the operations of DC’s in Ireland creating thousands of jobs directly and supporting thousands more indirectly.
“The challenges of success are increasingly becoming known in policymaking circles as the sector’s footprint expands in Ireland,” said Garry Connolly.
“The principle challenge is that of sustainability. The data centre industry in Ireland has been orientated to that purpose since its inception and will continue on its course to invest in renewable, sustainable energy solutions into the future.”