Ireland Remains Echelon's Prime Expansion Target After €1.7B Morgan Stanley Funding

Echelon Data Centres is stepping up its expansion across Ireland and Europe after securing €1.7B in debt financing from Morgan Stanley.

The Dublin-headquartered developer, founded by property entrepreneur Niall Molloy, plans to use the funding to accelerate construction across its portfolio of hyperscale data centre campuses and expand into new and existing European markets. Unlike many firms in the sector in Europe, it looks to develop renewable energy infrastructure alongside its sites. 

Having already diversified to large campuses away from the Irish capital and close to energy infrastructure, Echelon Data Centres Deputy Chief Executive David Smith told Bisnow that, fuelled by the new capital and the loosening of development constraints in Ireland, the company believes it is ideally placed to invest in a new phase of growth across the country.

“The funding is going to allow us to progress across the portfolio,” Smith said of a company that has emerged over the past decade as one of Europe’s most ambitious independent data centre developers, building large-scale campuses.

Echelon now has eight campuses across Europe totalling 1.2 gigawatts of capacity, of which 400 megawatts is operational or under development. The new multibillion-euro financing facility will help advance a development pipeline that already spans multiple countries, Smith said.

In Ireland, its portfolio is centred primarily on Dublin and County Wicklow — Dub10 and Dub40 in Clondalkin and Grange Castle, along with Dub20 and Dub30 in County Wicklow. Beyond Ireland, Echelon has data centre and power generation facilities in the UK, continental Europe and North America.

Echelon’s strategy has been to build an integrated platform that combines property development with energy infrastructure, allowing the company to deliver campuses capable of meeting the power demands of hyperscale customers.

Ireland remains at the heart of that strategy. The country has long been one of Europe’s most important hubs for global technology companies. But the rapid growth of data centres around Dublin in recent years has also created pressure on the grid, forcing policymakers to rethink how future projects should be developed.

However, with the planning shackles at least partially off following regulatory changes earlier this year, Smith believes the policy framework that has emerged from that process has provided greater certainty for developers.

Rather than concentrating development around the capital, Echelon has focused on building campuses in locations where energy resources and grid capacity are more readily available.

“That means regionalisation of demand and proximity to renewable energy assets,” Smith said of an approach that reflects a shift across the industry.

“We have a joint venture with SSE in Dundalk to develop shared infrastructure there to import onto the grid, and we’ll use that to take off the grid as well.”

“It obviously provides more economic impact in a part of the country below the average median GDP per capita as well,” he added.

Smith said such developments demonstrate how data centre investment can be aligned with national energy and regional development goals.

“I think these policy changes create a model for future development which is sustainable,” he said of a move from a de facto moratorium in place since 2021 to a model that means data centres contribute to grid stability and renewable energy goals.

“It’s also there to help meet the country’s goals around energy mix, regionalisation of demand, with a model that must also make commercial sense in order to attract the scale of capital required to build digital infrastructure,” Smith added.

“The country’s seen inward investment by other tech companies, and I think this policy is going to allow us to protect Ireland as a destination for inward investment,” Smith said.

He said the country has already navigated many of the hurdles that other European markets are only beginning to face as digital infrastructure demand surges.

“Other markets are now starting to encounter some of those constraints,” he said. “They’re going to have to go through this journey of figuring out what is the right sort of model for development going forward.”

Ireland’s energy transition is also shaping how new data centres are designed. The country generates about 40% of its electricity from renewable sources and has set a target of reaching 80% by 2030, with decarbonisation of the grid developing rapidly. But as renewable generation increases as a proportion of the total, managing the variability of wind and solar power becomes more complex.

“If the sun isn’t showing or the wind doesn’t blow, you’re going to have these drops,” Smith said. “You need traditional carbon peaking infrastructure there to manage through that variability. The next phase of that is battery storage, and that’s going to be a big part of the answer going forwards. The role data centres can play in supporting grid stability is often overlooked.”

While Ireland remains a core market, Echelon has also been expanding rapidly across Europe as demand for digital infrastructure accelerates. Last year, the company entered the Italian market and launched a joint venture with Europe’s largest utility, Spain’s Iberdrola, to develop data centre and energy infrastructure in Spain in a partnership that reflects a growing trend as energy companies and infrastructure developers work more closely to secure the power required by hyperscale campuses.

At the same time, Echelon is continuing to evaluate expansion opportunities.

“Within Ireland, we’ve got some great advantages [for attracting digital companies], with an incredibly strong, well-educated labour force. We have this history of helping these companies grow, and that creates its own ecosystem from a talent perspective,” Smith said. “From an engineering and a contractor perspective, you have Irish firms building data centres all over the world.”

Maintaining that competitive position will depend on ensuring planning and regulatory systems keep pace with the scale of investment required, and recent policy reforms are a step in the right direction, he said. But further work is needed to ensure developers have clarity around project timelines.

“It’s critically important that we maintain competitiveness around our ability to continue to build out this infrastructure,” he said. “We can’t take it for granted. The policy is a really positive step forward, but we have more to do around the timeliness of working through licensing and planning to give investors, developers and customers certainty.”