Irish data centres 'demonised' despite their 'critical role' in ICT sector

Data centres already account for about 20% of electricity consumption, with predictions that it will exceed 30% by 2030

Meta's Clonee Data Centre in Co Meath. read: Niall Carson/PA Wire

Ongoing limitations to building data centres are posing a "considerable risk" to Ireland's attractiveness for foreign direct investment and have been "demonised" by certain quarters of the country, a new report has found.

A study by economist Jim Power and Gerard O'Neill from Amárach Research said data centre's play a "critical role" in Ireland's corporate tax windfall and will be a key driver of economic performance. 

The report said that while Ireland has a "very successful" data centre ecosystem and has developed an international reputation for data centre development, the ecosystem was "under threat" due to significant infrastructure constraints currently challenging the country.

"Global investment in AI-driven digital infrastructure is massive, with hyper-scalers projected to spend $750bn on data centres in the US alone in 2026 and considerably more at a global level," the authors said.

"There is a significant risk that Ireland will miss out on this investment. The moratorium on new grid connections for data centres in the Greater Dublin Area lasted for four years."

The study, “Digital Infrastructure for the Future We Want”, which was commissioned by Digital Infrastructure Ireland, reported investments of €18bn in Ireland’s data centre ecosystem, spanning across 105 facilities and 35 operators. 

It noted that the economic significance of data centres "is greater than the direct employment they create" and the "vital element of critical infrastructure that they provide." 

“Data centres are essential for the Government’s AI and digital strategy, the modernisation of the public sector and the indigenous business economy,” the report notes.

Strain on national grid

In Ireland, data centres account for about 20% of electricity consumption, a figure national grid operator EirGrid predicts will exceed 30% by 2030. The government has also been warned that households could face higher energy bills resulting from greater strain on the grid. 

In addition, environmental organisation Friends of the Earth previously warned that Ireland’s unprecedented growth in data centres is contributing to an overall stagnation in the State's progress toward reducing greenhouse gas emissions and meeting its legally binding carbon budgets.

Data is 'the new oil'

However, the report said data centres have been "demonished" in some quarters in Ireland, and that the reality was they are a "vital ingredient" in the FDI ecosystem, public bodies and domestic companies.

"Data is the new oil.  Those countries who grasp the challenge will be the winners," the authors said.

"The fact is that many of the big global players in technology and digitalisation chose Ireland as their location for their IP assets, and they also located their EU headquarters in the country."

"This has reaped rich dividends for Ireland. It is now of deep concern that many of those are now bypassing Ireland for data centre development due to energy restrictions. Unless this situation is addressed, those companies will not expand any further and could decide to relocate IP assets and other investment. 

The opportunity cost for Ireland could be very significant."

The report added that it was "imperative" to accelerate the construction of new renewable power plants to fulfil data centre demand, which would result in "zero marginal emissions."