Proposed change to way data centres pay for gas could repel further interest, experts say

An analysis by the Commission for the Regulation of Utilities posited that 17 planned data centres would use the same amount of gas as around 2.6 million homes.

Proposals to change the way data centres pay for gas could harm the Irish Government's plans to continue courting energy-intensive data centres, according to leading academics and opposition politicians.

In June, the Commission for the Regulation of Utilities (CRU) led proposals to insulate gas usage in Ireland, suggesting data centres would pay lower tariffs on their gas network connection.

In exchange, data centres would agree to experience planned interruptions when gas supply on the grid becomes strained, likely in the event of extreme cold weather. The consultation process closed in August. A decision has yet to be made.

Rory Monaghan, a professor in Energy Systems Engineering at the University of Galway, said the CRU's proposals were indicative of Ireland’s strained grid capacity.

“Data centres need to consume electricity, and by failing to plan out the electricity grids and by not matching up the growth in demand with the growth in supply and the growth in the transmission network, we've made it so that data centres have to start consuming large amounts of gas,” Mr Monaghan told the Irish Examiner.

An analysis by the CRU posited that 17 planned data centres would use the same amount of gas as around 2.6 million homes. Mr Monaghan said the news could damage Ireland’s ability to court more data centres, which made up 23% of Ireland’s metred electricity consumption in 2025.

In June, the Department of Enterprise released a commissioned report by KPMG, espousing the economic value of data centres to Ireland.

“It wouldn't make data centres want to come to Ireland if they see this news,” Mr Monaghan said.

“It's likely that these centres, if they do sign up to this deal and they get their supply turned down during extreme weather events… they'll be using oil as a back-up.”

The Social Democrats’ climate spokesperson Jennifer Whitmore said the proposed policy could bristle potential foreign direct investment.

“If the government's preference for data centres is creating this really rickety energy grid, how are we going to attract any other FDI in?” she told the Irish Examiner.

“I just don't know how we're going to attract anyone if it just seems so insecure…every year there's issues with energy security." She said the proposals by the CRU were underpinned by “unfairness". 

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In a statement, the CRU said the proposal was an equitable one.

“The proposed direction reflects the challenges associated with managing future demand on the gas network and is intended to provide a mechanism that helps mitigate potential risks to future gas supplies,” a spokesperson for the regulator said.

“The proposal is therefore centred on facilitating prudent network management and protecting gas supply resilience, rather than providing an advantage to any individual sector."