EXCLUSIVE: Microsoft Warns Lack Of Power Is Diverting Irish Data Centre Investment To Scandinavia

Data centre energy usage has become the dominant issue for a nascent sector that has failed to shed negative public perceptions despite being identified as critical infrastructure in a number of countries.

That uneasy juxtaposition is nowhere more apparent than in Ireland, which has already lost out on investment and development to markets such as Scandinavia because of chronic grid connection issues, which have put data centre demand for energy head-to-head with domestic requirements.

The logjam means Ireland has lost its early mover advantage in the sector, Microsoft’s top executive on land acquisition warned Bisnow delegates in Dublin last week.

“The people who own the grids haven’t been able to keep up,” Microsoft Vice President of Lease and Land Global Val Walsh told attendees at Bisnow’s debut Data Centre Investment Conference and Expo (DICE): Ireland, as she criticised the planning process in Europe.

“Power. We look at power before anything else,” she said. “European regulations and planning are very slow, and things take 18 months longer than anywhere else.”

Promises to provide infrastructure for data centres tended to be on the “never, never,” she said. And companies don't invest billions of euros on a promise.

“Unless it’s ready to go, it’s not fixing the issue,” Walsh said, adding that the company looked favourably at the Nordics region for development in part because of the availability of hydroelectric power and because the country authorities had a positive view of data centre development.

She said Microsoft and other hyperscalers saw small nuclear generation facilities as viable to address power shortages but conceded that this had mixed perceptions within the communities surrounding such sites.

“Most operators are fine with it, but your mother, not so much,” she said.

There is starting to be a long-awaited change in perceptions around data centre development as the wider public in Ireland begins to understand the need for data storage capabilities in everyday terms, such as their mobile phones.

“Two or three years ago, working in the sector was a bit hush-hush. No one liked us. Now it’s recognised [by the state] that it’s big and important,” she said. “It was much more negative in Ireland than other places. But we need the human population to understand that their phones need data centres. It’s happening. We’re still the fastest-growing industry to store cat pictures.”

Walsh also addressed the complexities around sustainability and said Microsoft continued to focus on using renewables and setting its own high environmental standards, which are typically more stringent than national requirements.

“[President Donald] Trump came in and threw out the regulations, but our goals haven’t changed, and we’re doing it properly,” she said. “What’s difficult is that we set our own standards and then have third parties use our centres when the regulation hasn’t caught up, meaning they don’t have to comply. It would be ideal if the EU would be the same rather than have nuances wherever we go.”

Looking to solutions in the Irish market, she said private wires were being discussed, but she was less convinced about their delivery, saying “everything on paper is fine, but the rubber has to hit the road.”

“I would also prefer if not every person could disrupt permitting, but unfortunately, we are where we are [in Ireland],” she said. “We are pretty closed in Dublin and have no new customers, so everything is being diverted to other European countries.

“It’s Catch-22. I don’t think the government knows how to fix it. Hyperscalers will not turn customers away, as if we do, they will go to Amazon, for example, and with AI coming on, it’s added. In fact, AI is more than an addition.”

She said that this rapidly changing landscape, with new chips constantly being launched, made new builds and third-party provision difficult as Microsoft looked to sign long-term partnerships, but this had become increasingly difficult “when you don’t know what you need in two years, let alone 10 years.”