Regulator Opens Up Possible Data Centre Pathway Amid Fears Dublin Has Been Left Behind

After essentially grinding to a halt, Ireland's data centre development sector could be given a lifeline following new proposals from the country's utilities regulator.

The Commission for Regulation of Utilities has published proposals on its connection policy for large energy users, which could help some data centre projects outside of Dublin.

It may take a change in strategy and location for those building in the sector in order to get new schemes out of the ground and connected to the grid. But for some, any positive change can't come soon enough amid warnings Ireland is already being overlooked for data centre investment.

“What’s clear is that the model where the industry relies on being able to connect to the grid on a first come, first served model is no longer sustainable in Ireland or anywhere else," CBRE Data Centre Research Director Kevin Restivo said. “Developers will have to be able to generate their own power to allow the industry to grow.”

Ireland’s data centre investment and development sector has been put in a holding pattern by regulators and the country’s state-owned grid operator EirGrid amid concerns that the energy-guzzling facilities are soaking up too much of the country’s available power supply.

Electricity consumption by data centres has surged and is set to hit around 30% by 2030, according to CRU, while Ireland's reputation as a global hub for data centres is at risk from European competitors after EirGrid’s de facto moratorium on data centre development around the capital in 2022 — it will not consider new load requests until 2028.

As a result of the moratorium, new development is currently bypassing Dublin and heading to southern European markets like Madrid and Milan. That is in spite of good take-up in the Dublin market. 

According to CBRE, in Q1 there was 32 megawatts of capacity take-up in Dublin, slightly more than the new supply delivered, and 85 MW of data centre supply delivered across Europe’s primary markets, 23MW less than the same three-month period last year. The capacity was split largely across Frankfurt and Dublin, and as a result, CBRE predicts that Dublin's 89 MW of capacity will be taken up by the end of 2025.

And with little new supply in the pipeline in Ireland, the CRU is hoping to provide clarity on electricity grid connection policy for data centre developers and investors and has outlined a potential pathway for new data centre connections to the grid. That involves considering security of supply and network constraints while minimising the impact on national renewable energy targets and carbon emissions.

At the heart of this are specific requirements about “proximate” generation and storage capacity for new data centres, which will be required to provide both.

This means that the generation or storage facilities should be located close to the data centre and any proximate generation must take part in Ireland’s single electricity market. There is no explicit requirement for renewable sources.

Restivo pointed to Starwood-backed Echelon Data Centres, which is developing a €3.5B data centre campus in County Wicklow and in September last year secured a grid connection, the first large-scale data centre in Ireland to receive a grid connection from EirGrid in more than four years.

The 484K SF DUB20 campus will eventually provide 200 MW of IT capacity, with phase one delivering 90 MW. The data centre campus will include a biogas power plant and be connected to a nearby wind farm. Construction on DUB20 will start this year, with DUB30 to follow.

“Echelon clearly foresaw the constraint issues in developing DUB20 in Wicklow, and it’s likely that we will see more large-scale development just outside greater Dublin, especially to the city’s south, which is a trend we’re seeing in London and Frankfurt, for example,” Restivo said.

Echelon Data Centres now has six sites across Ireland and the UK with a total potential capacity of up to 500 MW. Its sites in Ireland — DUB10 and DUB40 in Dublin’s Clondalkin and Grange Castle along with DUB20 on the former Irish Fertilisers Industries plant at the Avoca River Business Park in Arklow and DUB30 5 kilometres away at Kish Business Park — will have a combined capacity of around 400MW.

Earlier this month Taoiseach Micheál Martin, at the official launch of DUB20 and DUB30, described the two data centre facilities being developed by Echelon in Co Wicklow as “the model for future data centre development in Ireland”, as he pointed to the fact that they are located in a regional area where the grid is not constrained and will have the capacity to generate and dispatch power to the grid when needed. 

“The energy demands of DUB20 and DUB30 will underpin investment in almost 1 GW of wind-generated renewable energy, power that will help reinforce the national grid, increase Ireland’s energy security and support our transition from fossil fuels to clean, green energy sources,” Echelon Chief Operations Officer, Graeme McWilliams said.

But it is not as simple as building where there is power, CBRE's Restivo said. Projects need tenants, many of whom are the hyperscalers, plus workers with specialist skills to operate them and access to communications and connectivity. That is easier near large cities.

“What we’ll see over the next five years is the rise of what developers call fungibility, which are flexible campuses that can be adapted to different AI and cloud requirements and where they have all their kit in once place,” Restivo said. “Grange Castle is an example, and we’ll see investors try and develop these where there are resources but as close to Dublin as they can get.”

Keppel DC REIT is another of those developers responding, with renewable energy agreements covering 92% of its Irish power demand and its installation of a battery energy storage system at two data centres in Citywest and Ballycoolin to capture excess renewable energy production in a project with specialist GridBeyond.

As a result of the new proposals it is likely that sites will have some renewables, some gas — including biofuels — and some storage, and plans for a series of new energy parks were previously set out by the CRU. The decision paper could help investors move further forward and help unlock energy parks to get a grid connection if they meet the criteria.

“The lack of certainty has actually seen existing data centre sites pause on storage, but for new schemes, we’re seeing interest in very large energy store facilities,” GridBeyond Regional Director Ireland Denver Blemings said. “We’re also seeing the vast majority looking to sign deals with renewable energy companies or buy projects to develop them and generate the power themselves.”

While Blemings feels that the CRU's proposals lack firm commitments, he does believe that that they offer a “direction of travel” for an industry that has been waiting for more clarity.

“The companies looking to build new data centres are committed to sustainable energy sources like wind and solar, and really the point around grid connection now is that they want certainty around being able to import and export from the grid but not to draw power from it, which means this should actually be a win-win for both sides," Blemings said.

“What we need is a reset so that the data centre developers can work within clear regulations and engage with EirGrid over their proposals and then be allowed to get on with it.”

Bisnow will be hosting the Data Centre Investment Conference And Expo (DICE): Ireland event on 26 June at Dublin Royal Convention Centre. Sign up here.