New regulations have awakened the Dublin data centre market from its slumber, but they also mean more hoops to jump through for investors and developers compared with other less regulated European markets.

At Bisnow’s Ireland Data Centre Investment Conference & Expo in Dublin, investors, developers and infrastructure specialists argued that short-term pain could lead to long-term gain, especially if more tenuous projects fall by the wayside.

But those gains will only come if developers can grab the moment and find more innovative methods to create their own power ecosystems.

“Clarity is always welcome and massively beneficial. By no means are we at the end of the journey, but we have the parameters to understand,” Echelon Data Centres Head of Investment Charlie Etheridge said, though he warned that in the short term, the new rules could make development harder.

The regulatory framework introduced by Ireland’s Commission for Regulation of Utilities has provided much-needed clarity for new data centre connections, but it has also raised the bar for developers.

Under the CRU’s updated policy, new data centres connecting to the electricity network must provide generation and/or storage capacity equivalent to their requested maximum import demand, while also meeting at least 80% of annual demand through additional renewable generation in Ireland. The policy also requires system operators to identify constrained and unconstrained areas of the network.

The changes provide clearer guidelines for development while removing some of the speculation that previously surrounded prospective sites, but Etheridge said investors now have to think more carefully about where projects can actually be delivered.

“Speculative projects may leave the market,” he said, adding that the development pipeline includes schemes he does not believe are viable and that will not be delivered.

Ireland has a sizeable data centre development pipeline, although as Etheridge pointed out, the amount that can realistically be delivered is probably much smaller.

Cushman & Wakefield’s latest data for Europe, the Middle East and Africa shows Dublin with 1.26 gigawatts of operational capacity, 71 megawatts under construction and 695 MW planned, giving it about 766 MW of near-term pipeline. That compares with 1.63 GW in London, 1.44 GW in Frankfurt and 1.09 GW in Paris.

A KPMG report commissioned by the Irish government identified around 1.7 GW of data centre pipeline, including early-stage development, but this is more indicative of latent demand than likely delivery.

“Location is important,” Etheridge added. “Central Dublin will be tricky for a number of years, so where can you locate and make a positive impact so that, in the future, we can come back to Dublin?”

He pointed to growing fibre investment in regional locations and developments such as Echelon's Dub20 project at Arklow as examples of the locations being considered as the market expands.

Indeed, the CRU's new policy is explicitly intended to encourage development outside constrained areas, while EirGrid and ESB Networks are required to publish information on current and future network capacity. For investors, that creates a potential opportunity to get ahead of a market that is being forced to become more geographically diverse.

CBRE Investment Management Head of Infrastructure Research Tania Tsoneva insisted that Ireland remains an attractive investment market precisely because it has already built significant operational capacity.

“When we entered 2017/2018, we bought in the U.S. at moderate prices, benefited from the pandemic, work from home and AI. Ireland also built a lot of the operational capacity ahead of many others,” she recalled.

The current constraints, she argued, may cause some shorter-term challenges but could ultimately help prevent the market from becoming oversupplied.

“Yes, there are constraints, but sometimes that's good for a pause. It avoids saturation,” Tsoneva said, pointing to other European markets which risk such a situation unfolding, while she maintained that the global investment appetite for data centres remains strong.

But investors also have a much broader map to choose from, and Tsoneva pointed to investment activity in the Nordics, Madrid and Iceland, with power availability and cost among the first considerations when evaluating those markets.

“Power reflects the highest costs,” and Spain, she noted, had invested heavily in its electricity network and renewable generation, creating a combination of available power and relatively clean energy.

Pure Data Centres Group Property Director-Global Operations Agnes Warner agreed and said the industry's relationship with power is changing fundamentally.

“When I think about how it used to be compared with now, history is very relevant,” she said. “In Dublin, you couldn't get on the grid, so are we waiting or coming up with something else?”

Pure Data Centres responded to the original constraints by looking beyond conventional grid connections.

“We got a gas connection, so we built a microgrid to convert gas to electricity,” Warner said, adding that the company is looking to decarbonise that model through biomethane, with the fuel sourced from Ireland and the European Union. For Warner, however, the next generation of projects will need to go further.

“You have to think about a mix: gas, grid, battery storage,” she said. “Developers need to consider how a data centre can contribute to the wider energy system rather than simply securing enough electricity for itself. How can you contribute — for example, local district heating — or manage peak demand? It’s no longer just about bringing your own power but how you become a partner.”

That shift could create a new investment category around on-site generation, batteries, microgrids, heat reuse and other infrastructure that historically sat outside the core data centre asset. The regulatory framework is already moving in that direction, and Ireland is also entering a major period of wider grid investment. The CRU approved a regulatory framework allowing up to €18.9B of investment in the electricity network through 2030, including upgrades to existing infrastructure and new network capacity.

But power is not the only constraint. Once developers have secured a viable location and power strategy, they still have to build the facility. And investors are increasingly focused on whether projects can be delivered. Suir Engineering Head of Strategy Peter Browne said Ireland's fractious relationship between data centre demand and grid capacity means projects need to engage with infrastructure providers much earlier.

“The good old days [were] plugged in, but now you have to interact with the grid,” he said, with the industry moving from a model based on grid supply and backup towards a more complicated combination of renewables, generation, storage and grid interaction.

“It will be trial and error,” Browne said. “Long lead items are impacting the critical path, and so it’s all about conversations as early as possible. There’s no silver bullet. For example, there’s big issue around procurement of copper because of demand, so we hedge buying commodities.”

The same emphasis on predictability is emerging in construction, and Buildots Regional Director Tommy Cooke said technology can help developers maintain programmes rather than simply attempt to accelerate them.

“That can help control speed to market, not necessarily going faster but not losing time, maintaining delivery of the programme,” he reflected, saying that construction delays had become normalised across the industry but that the data centres market couldn't afford to accept that.

The arrival of artificial intelligence is adding another layer of complexity. Warner said AI facilities cannot simply be treated as larger versions of conventional data centres because of the way power is consumed within them and the cooling requirements of high-density computing.

“For AI, you need to build from scratch because of the way power is used internally,” she said, with liquid cooling increasingly important, while heat recovery creates another potential opportunity. “We don’t want to waste heat. But the technology and economics have to work in practice.”

Etheridge said Ireland has an opportunity to emerge stronger if the industry and government agencies can coordinate and work together.

“Ireland has a great opportunity and is ahead in terms of regulation. Over the long run, that’s got to be a good thing,” he said, arguing that the industry needs to consider its role in the wider energy ecosystem and the importance of maintaining its reputation in light of U.S. protests.

“If regulation is to be considered a success, then two to three years from now, we’ll see demonstrable new schemes delivered and identified regions in the country as the bounce-off point for new investment," Browne said. "If we’re still asking, we’ve failed.”