How Ireland plans to beat the data center backlash

TALLAGHT, Ireland — In a suburban industrial park south of Dublin, a sprawling mass of tubes, vents and steel stretches as far as the eye can see, forming a dense web of gray monoliths that encircle the city.

As the EU’s tech capital, where most of the world’s technology giants have their European headquarters, Ireland was ground zero for the backlash against the energy-guzzling data centers needed to power the promised revolution of artificial intelligence.

Dublin is now leading an experiment within Europe to force tech firms to invest in renewable energy. As pushback spreads across Europe and data centers prove a hot-button issue for the U.S. midterm elections, that puts Ireland at the vanguard of countries globally that are trying to quell voter anger over financial and environmental disruptions caused by data centers.

Back in 2021, Ireland was far ahead of the curve in slamming the brakes on data centers as its utilities regulator almost entirely halted new facilities connecting to the creaking electricity grid around Dublin. Authorities warned that the exploding data center industry posed a “significant” risk to the security of the country’s electricity supply. 

Last year when the effective moratorium was lifted, Ireland imposed a checklist for tech firms that want to connect new data centers to the grid. That includes requirements to fund new renewable energy projects in Ireland to meet at least 80% of their energy demands.

As countries from the Netherlands to Denmark and U.S. states from New York to Oregon consider their own moratoriums, Ireland’s approach is a test as to whether strict clean-energy rules can be part of the solution — or whether they will gradually drive investment away from the region while sucking up local renewable energy supplies and continuing to alienate locals.

“The mood music coming out of Europe now is Ireland’s the canary in the coal mine,” said Ronan Kelly, chief executive of data center lobby Digital Infrastructure Ireland. “We’re leading the charge to say we need to take a responsible approach to building new data center infrastructure and new capacity. We can’t just turn up diesel generators and run them 24 hours a day.” 

Ireland is at the top of the EU’s rankings on data-center capacity, with 31 megawatts per 100,000 people — more than triple the capacity of the Netherlands in second place.

That still trails well behind data center hotspots in the U.S. like Virginia, Texas and California, where more than one in three Americans live within five miles of a center that’s already operating.

Data centers accounted for almost a quarter of all electricity use in Ireland last year, a surge from 5% a decade ago, and close to the same amount of electricity used by all of the country’s households combined. A UN report in June described Ireland’s dense data center web as a “cautionary” tale of how not to let AI infrastructure growth outpace local power grids. 

Brussels is looking to get out in front of the issue, with the European Commission's green transition and competition chief Teresa Ribera telling POLITICO that the EU should force tech firms to invest in clean energy to power their data centers.

As the EU works on upcoming energy efficiency standards for data centers, Kelly said the “worrying” part for Ireland’s data center sector, and the 875,000 jobs it underpins, is whether other countries in Europe will follow suit with similar rules — or if Ireland’s requirements will be an “anomaly” that drives data investment elsewhere.

Countries like Spain and Germany have introduced rules for data centers to show that a certain portion of their electricity consumption is covered by renewables. But Ireland has gone one step further in asking data center developers to fund new renewable energy projects.

For Microsoft, one of the biggest data center investors and operators in Ireland, the clarity around renewables is a “critical” green light to keep investing in Irish projects. The U.S. tech giant has said it already matches 100% of its global energy consumption with renewables, mainly through power purchase agreements with renewable energy providers.

James O’Connor, site lead for Microsoft Ireland, said the company is now moving to the design stage for a “significant” new data center development at Jiggenstown outside Naas, although the project is already facing local opposition.

“We understand the public concerns that are out there, clearly, when you have this sort of demand on electricity,” O’Connor said. “[But] I think we have a huge opportunity to tap into huge amounts of renewable energy, because we can invest in that, we can provide consistent demand, and we know that's going to be critical.”

The largest share of Ireland’s electricity last year at 40% came from burning gas, but the share of electricity generated by wind reached 32%. The island nation still has massive untapped potential to produce renewables from offshore wind.

Ireland’s new data center policy requires companies to immediately provide their own power, and they have six years to get new renewable projects up and running to bring that power up to 80% renewable energy.

Environmental activists have warned that in the first six years, new data centers could still be mostly powered by fossil fuels like gas generators, driving up emissions and electricity prices.

“On paper it looks good, but in practice it's actually quite dangerous,” said Rosi Leonard, from environmental NGO Friends of the Earth Ireland.  “It doesn't seem to hold up against Ireland’s climate commitments, because it’s creating the conditions for a massive build out [of new data centers]. But companies have a six-year glide path to build out the renewables.”

Friends of the Earth Ireland is part of a group of environmental organizations lodging a case against Ireland’s utilities regulator over the new rules, and is campaigning for a complete moratorium on new data centers, as well as limits on the expansion of existing facilities.

When 80% of data center power eventually comes from renewables, Leonard said, that’s a lot of renewable energy going towards fueling AI. Ireland's Climate Change Advisory Council has warned that data centers are “cannibalising any increase in Irish renewable capacity.”

“What happens in terms of the existing industries and sectors that need to decarbonize?” Leonard asked. “You're giving one industry permission to expand at a very significant rate, saying it’s no problem because you need to build renewables, but that actually will reduce the share of renewables on the system as a whole.”

A recent report commissioned by the Irish government says data centers are “fundamental to Ireland’s position as a leading global hub for digital and technology-driven enterprise,” noting that jobs dependent on data centers bring in about €14.6 billion in annual employment-related taxes.

The report was criticized by Irish MEP Lynn Boylan from the left-wing Sinn Féin party for omitting findings on how data center expansion could drive up people's electricity bills.

Standing outside the Amazon data center in Tallaght, David McManus, a local councilor in South Dublin from Fine Gael, the center-right party currently in coalition government, said data centers are part of the deal that comes with Big Tech.

“This is part and parcel of what Amazon, Google, Microsoft see as being essential to their operations,” he said. "You can't just turn around to these high-tech companies and say, yes, we want the high-paid engineers, and lots of people employed, but we don't want the data centers that back it all up."

McManus points out that heat from the data center is piped into nearby social housing, the library, and other council buildings. South Dublin County Council also brought in more than €30 million in commercial rates from data centers last year.

“They are consuming a lot of [energy] on the national grid, but that also generates revenue for us to invest in the national grid,” he said. “Ultimately, when it comes to AI and data centers, it’s tempting to put up the fortress fence and say ‘no, we won't have any of this.’ If that's the case, we should be going back to where the economy was probably 10 years ago where we had less employment, less high paying jobs, less income tax, and less corporation tax." 

But Leonard said voters perceive that Big Tech firms have too much power: “A lot of these companies have lobbied quite heavily at EU level, not to have to disclose certain energy and water metrics ... people just feel like this is just a joke at this stage, how much power these companies have.”