An opinion piece by Tony Jeffery
Overview
This article aims to make actuaries more aware of the importance to Ireland’s ability to meet its climate targets of the issue of data centres and to urge members to make submissions to the consultation on this issue that is open until 4th April.
What’s Up?
The Commission for Regulation of Utilities (“CRU”) has recently published a “proposed decision on a new electricity connection policy for data centres”. This is now open for consultation until 4th April. It is called “Review of Large Energy Users Connection Policy”[1], but it is about data centres, and it represents what may well be Irish policy going forward.
Why are Data Centres important?
We may not find the Irish weather ideal, but its cool temperate nature is pretty much perfect for data centres. As a result, a lot of them have been built here and a lot more are planned.
“Recent and sustained growth in Large Energy Users such as data centres is having an impact on the ability of Ireland’s electricity system to meet reasonable demands, that is not comparable to any other sector or industry. The share of electricity consumed by data centres has grown from 5% of total national demand in 2015 to 21% in 2023. Electricity demand from data centres in Ireland is projected to almost double within the next ten years based on already contracted data centre demand connections which are yet to be built and connected to the network. It is expected that data centres will represent 30% of national electricity demand in Ireland by 2030 if no additional data centres are contracted over and above what is already signed up.”[2]
So effectively data centres have been partially counteracting Irish attempts to move to renewables by upping the demand for electricity.
What is Current Government Policy on Data Centres?
The Program for Government has the following on policy towards data centres
“The Government recognises the criticality of digital infrastructure in economic growth and the delivery of public services.
This Government will:
• Allow data centres that contribute to economic growth and efficient grid usage, such as prioritising waste heat capture for district heating systems and other local uses.
• Enhance data centres’ use of renewable energy sources, energy efficient technology and effective solutions, such as waste heat capture to reduce their carbon footprint.
• Scale up investment in critical infrastructure and in our electricity grid which will be advantageous for customers and enhance the data centre footprint to support continued FDI[3] investment.
• Provide nationwide 5G for high-speed, low-latency connectivity, which is important to the tech sector and data centres.
What are the draft decisions?
The CRU document gives the following proposals
In summary, the main elements of the Commission’s proposed decisions are:
• This policy applies to all data centres seeking to connect to the electricity network.
• Data centres connecting to the electricity network will be required to provide dispatchable (i.e. available when it is needed by the system) generation or storage onsite or nearby
• The ramping up of a new data centre’s demand will be linked to the delivery of the required generation capacity.
• The System Operators should continue to take into account the location of any data centre connection applications and associated generation capacity in respect of whether it is in a constrained or unconstrained region of the electricity network.
• The System Operators will be required to publish regular information on existing and future grid network capacity
• Data centres will be required to self-report to the System Operator annually in relation to their use of renewable energy and their sites’ emissions..[4]
The notable omission is a requirement to generate electricity renewably.
My Views
That Ireland is a good place to put data centres, is of benefit to the economy. It may also be better for the global environment to have data centres here where the carbon cost might be lower.
The proposed decision does make appropriate noises about renewable energy and constraints on our national network. It is however (like the Programme of Government) putting growth first and environmental issues second. Onus is put on the System Operators to “take into account” and report but there is no compulsion. It does not say that stability of our national grid is a priority or that we must transition to renewables and there is a potential for both to be threatened by unchecked data centre growth.
It may very well be that renewable energy’s cheaper costs may help drive costs down and to some extent system operators’ and the public interests may coincide. But what happens if they do not? Is the Panglossian optimism inherent in the proposed decision well-founded?
I am concerned that the private sector will deliver their data centres quickly while the renewable energy and critical infrastructure will lag behind as the public sector struggles to deliver. In this context it is interesting to note that Wind Energy Ireland[5] pointed out in January that while An Bord Pleanála approved 10 wind farms in 2024, this was only half the number needed to meet Ireland’s climate targets and there were 30 projects awaiting decision.
I will be making a personal submission. I would urge fellow actuaries to do the same. In my opinion it is more important that people make contributions to the debate than the finer points of what they say. The recent general election was very disappointing in that the environment was not an important issue at all. If many people start taking an active interest in environmental issues the Government may be more inclined to give such issues higher priority.
Tony Jeffery is a retired actuary who has been active within the Society for many years and is currently a member of the Society’s Sustainability and Climate Change Committee.
[1] https://www.cru.ie/publications/28573/
[2] Extract from the CRU Proposed Decision Paper https://www.cru.ie/publications/28573/, my emphasis.
[3] Foreign direct investment
[4] CRU Proposed Decision Paper https://www.cru.ie/publications/28573/
[5] Wind Energy Ireland is the representative body for the Irish wind industry, this information was taken from their press release on 16th January 2025
The views of this article do not necessarily reflect the views of the Society of Actuaries in Ireland, the Sustainability and Climate Change Committee, or the author’s employer.