Finance Minister Paschal Donohoe has defended the eligibility of data centres to avail of the Government’s energy subsidy scheme, but said he did not expect them to apply.
The Temporary Business Energy Support Scheme, announced in Budget 2023, gives grants worth 40% of the increase of the bill to businesses that can show the unit cost of their energy bills has spiked by at least 50% compared to last year.
Speaking to reporters, Mr Donohoe confirmed that data centres can apply for the scheme if they have met the same change in unit energy costs that other businesses have.
But he said that they are unlikely to apply for them due to the cap of €10,000 a month per trade, and because the government is working on a scheme to help high-energy users specifically.
“From the point of a tax scheme, we cannot differentiate between different parts of our economy depending on the scale of the business or the nature of that business.
“However, my expectation is, is that due to the presence of a cap on how much support a business can draw down on, this scheme would be of very, very limited use to a data centre because they are high energy users.”
He said that the Department of Business, Enterprise and Innovation have indicated that they are going to bring forward a scheme to try to offer support to higher energy users “a little later in the year”.
The expansion of data centres in Ireland, particularly in the Dublin region, has led to a large increase in electricity demand which is projected to continue to rise in future years.
The Central Statistics Office said there was a 265% increase in data centres’ electricity consumption in the six years from March 2015 to December 2021.
Data centres’ electricity consumption rose by 32% in the 12 months to May – meaning they use more electricity than meter users in rural Ireland.
Ireland’s electricity operator Eirgrid is forecasting that data centres and new tech will represent around 28% of demand in 2031 versus 17% in 2021.
Amid the energy crisis, opposition politicians have criticised the high number of data centres and the strain they have put on the Irish grid.
Mr Donohoe said: “The companies that have data centres in Ireland employ tens of thousands of people, and in the changing world that we are in, with heightened competitiveness regarding foreign direct investment, the countries that can host data centres, due to our climate, due to the policy environment that we have, that is a very, very valuable part of what an economy can offer large employers.
“While a data centre itself directly does not employ many people, they are a critical part of the equation for companies that are here in Ireland that are really, really, really large employers, and for those opposition critics in Dail Eireann, who want to chase data centres out of Ireland, that is a quick journey to chasing jobs out of Ireland as well.”
Mr Donohoe made the remarks after publishing the Finance Bill 2022, which is the legal footing for measures contained in Budget 2023.
After announcing earlier in the week that the concrete levy would be halved and the rent credit would be expanded to the parents of third-level students, Mr Donohoe said the monthly cap for businesses would be increased to a maximum of €30,000 in certain circumstances.
“For example, if a business operates from three or more locations, it may be entitled to pay with respect each location, or is subject to an overall cost of €30,000,” he said.