New Regulation Brings Hope Dublin Data Centre Market Can Wake From Its Slumber

Ireland’s rise as one of Europe’s most important data centre hubs was a story of geography, climate policy, capital and politics that have seen the country mentioned alongside the continent’s data powerhouses.

An effective moratorium on development then threatened to derail its lofty position and curtailed the foreign direct investment upon which the Irish economy relies. But earlier this year, Irish policymakers began to relax some of the restrictions that had all but halted data centre development.

The sector’s success had created inevitable tensions, especially over the energy-thirsty requirements of hyperscale investment and the limits of a small island power system. With the regulatory gloves off, those tensions won't disappear, but the prospects for growth in the sector now look far more promising. 

“The [recent regulatory changes] mark a clear turning point for the Irish data centre market. There is now much greater clarity for developers and investors,” Echelon Data Centres Head of Energy Systems Cormac Nevin said. The developer received an $850M investment from Starwood Capital in 2024. 

Ireland’s unique combination of a location at the western edge of Europe, making it a natural landing point for subsea cables linking North America and Europe, a skilled workforce and a temperate climate have made the country attractive to global technology firms seeking reliable, cost-efficient infrastructure.

On top of that, Ireland’s long-standing corporate tax regime and pro-investment stance have reinforced its appeal, enabling Ireland to capture a disproportionately large share of Europe’s data-hosting activity and joining the so-called FLAP-D markets of Frankfurt, London, Amsterdam and Paris.

Savills Director-EMEA Data Centres Cameron Bell said capacity in Ireland was up 9% in 2025. But data centres’ energy-sapping requirements mean the sector’s energy consumption had risen to more than 22% of the country’s total by 2024.

And with demand only growing, the government slammed on the brakes.

However, its Large Energy Action Plan, announced last month, aims to encourage sustainable development and permits new data centres providing they generate their own power, add grid flexibility and source a high percentage of energy from renewables.

“It's a step in the right direction," KPMG Director-Global Strategy Ireland Chris Brown said. "Data centres need to articulate their social license to operate because a significant amount of Ireland's overall economy is dependent on having data centres in a major cluster. And if you were effectively to lose that position long term, you also risk the existing FDI success story that's here."

People need constantly reminding that if you have no data centres, you have no gaming, no apps of any type, no social media, Brown pointed out. 

For the sector itself, the easing of constraints is likely to unlock a new wave of investment, albeit more selectively than in the past.

The recent granting of a major grid connection for a multibillion-euro Echelon project in County Wicklow was widely interpreted as a signal that Ireland remains open to large-scale data centre investment, provided it aligns with national energy priorities.

“We expect the market will shift from a Dublin-centric model towards more regionally balanced development, where digital infrastructure is aligned with available grid capacity, renewable generation and security of supply," Echelon's Nevin said.

Echelon's strategy has focused on well-located regional sites, developed in close coordination with the system operator, that support energy security while delivering scalable, future-ready infrastructure, he added.

He believes that LEAP is particularly important because it directly links data centre demand with the national renewables pipeline, including offshore wind.

“If delivered at pace, it can unlock new investment outside the most constrained parts of the network and strengthen Ireland’s competitiveness,” Nevin said. “The opportunity is significant, but delivery will be decisive. Clear grid processes, planning certainty and timely support for renewable projects will determine how quickly the market can respond.”

There are early signs of change. In January, Amazon Web Services received planning permission for three data centres in north Dublin, three years after Fingal Council approved the project, only for appeals to delay the development.

The data centres are planned for a 65-acre site at Cruiserath Road, and the renewed approval is conditional on AWS entering into a corporate Purchase Power Agreement with a renewable energy provider, which must be equal to or greater than the energy requirements for the data centres.

Last July, EdgeConneX overturned a council refusal, subject to renewable fuel conditions, for a €30M scheme in Lucan, while in August, planners gave the green light to a high-profile €3B data centre campus proposed by Herbata for a complex of six data centre buildings at a site next to the M7 motorway and business park at Naas, County Kildare. However, Herbata anticipates further environmental appeals before the projected eight-year construction phase can begin.

KPMG Energy and Decarbonisation Lead Ireland Trevor McGovern said fresh approaches have been a big positive, especially in terms of green energy parks and the role data centres can play in helping Ireland reach renewable targets.

The difficulty, he said, is that establishing a first campus away from Dublin requires the debut company taking on the costs in terms of power infrastructure, road access and other utilities.

“As a result, they still have a strong preference to be in primary locations, so what you see is a stretch of the Dublin data centre market further from the city centre," he said.

"That's the short to medium term. Longer term, absolutely, it's about power, and in Ireland, that would be the south coast. But for the moment, it's stretching rather than relocation,” McGovern said.

However, while regulatory change can point investment in a new direction, it can’t flick an instant switch.

“I think the market is in a funny place," Gardiner & Theobald partner Adam Thurley warned. "It has been for probably six or nine months for both the UK and Irish markets, stalling because of power. People are still being very cautious rather than optimistic in the sector."

In the meantime, the Nordic market is growing fast, he said. 

Ireland is seeing a lot of people from outside of the sector wanting to get involved. The changes in regulations are still fresh, people are working out what it's going to look like, but in terms of sustainability, "I think it will help because companies can now focus more on the things that matter,” he added.

Economically, it should also mean that Ireland can protect its position as a major data centre market.

“If you look within FLAP-D, the others are all essentially serving their financial markets. That's how they grew. Whereas, if you split it out, hyperscalers versus smaller colocators, Ireland is only second behind London currently,” KPMG Managing Director for Energy Transition Rodney Doyle said.

“Ireland is a net exporter of data to an extent that no other FLAP-D market is. But clearly that would have been under risk, and it's part of a larger stickiness for FDI jobs and having any tech headquarters in Ireland as well.”

Doyle believes Ireland is a “great lesson for other jurisdictions” because energy has gone to the top of political conversations, and he foresees that the challenges in Ireland will come to multiple grids and cities.

“Ireland shows a path forward for how you do it, and the reaction and the flexibility of the hyperscalers and the data centre sector shows they're willing to go down these roads and make changes,” he said.