Apple data centre: Low lies appeal of Athenry

In the latter part of 2014, two State agencies were beavering away to secure a piece of land for an important investor. Between them, IDA Ireland and Coillte scoured rural fields to identify a suitable site on which to build a data centre.

But this wasn't just any data centre – this one would have the Apple logo on it, would employ 150 people, would cost €850 million, and would be operational by 2017.

The all-singing, all-dancing data centre was extraordinarily well received and painted IDA Ireland in a wonderful light. This was a big win and, even though the number of jobs that it would bring wouldn't be enormous, the spin-off benefit to Athenry – and the aiding of economic recovery outside of Dublin – would be significant.

It was clear from Apple’s announcement, when it came, that this site was chosen to effect a quick planning process. Back then, in February 2015, it appeared the State agencies had outdone themselves, co-operating effectively to attract some top-drawer foreign direct investment (FDI) to a part of the State that was a rare recipient of such.

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But things began to turn sour very quickly.

Within three months, the planning application to Galway County Council attracted an objection from a group of residents saying that this was the “wrong site”. More importantly, perhaps, the group had concerns around energy use – fears Apple had sought to allay when it announced the project would be powered entirely by renewable energy.

Fiasco

This marked the beginning of what would ultimately become an ungainly FDI fiasco in which a handful of people would effectively stop an €850 million investment.

"Ireland has set out its stall as a globalised economy that is open for business and investment," said Dr Neil Walker, Ibec's head of infrastructure, energy and environment. " As the Apple Athenry case demonstrates, our planning system as presently constituted does not support this vision."

Among the objectors was Allan Daly, who lived locally to the site. For him, the energy consumption of the centre would have been too great, something unlikely to be satisfiable by any amount of renewable energy. The impact on the national grid, he felt, would be too much.

Eirgrid has forecast that, if all the data centres planned by the IDA are actually built, it could account for 75 per cent of new energy demand by 2030, and the grid would have to be upgraded substantially.

The An Bord Pleanála inspector handling the Apple appeal agreed with Daly's argument that it could not clearly be shown how Apple's power demand would be met from "100 per cent" renewable sources, Daly told this newspaper in December. "Yet the board's approval did not require the multinational to show how it would offset the project with a wind farm, or the waste-heat recovery system it was required to built in Denmark, " he said.

An Bord Pleanála and Galway County Council did not share Daly’s concerns, and granted permission for the development.

That didn’t satisfy Daly, who was one of a number of people who ultimately dragged the Athenry plans through the courts.

Spotlight

While all the fallout from Apple's decision to abandon the project is unquestionably negative for Athenry, it throws a spotlight on concerns about the construction of data centres where none necessarily existed before. As Tom Parlon, the director general of the Construction Industry Federation (CIF), suggests, the ramifications for the poor planning system are far greater than the loss of Apple's investment.

“Ireland’s reputation as a location for FDI has been irreparably damaged,” he said.

“You can be sure that our competitors internationally will happily point to this disaster when pursuing investment from global companies. The story of what happened here in Athenry will be at the top of every risk report placed on the desk of a global chief executive for the coming years.”

Perhaps it will, not least on the desk of Apple chief executive Tim Cook, though Cook will be very familiar with Ireland's planning woes and will unlikely need reminding.

Apple is understood to have invested in the region of €10 million on the site for the proposed data centre.

Industry sources say planning costs for a site of that size and nature would be in excess of €1 million. And that’s before you consider the legal costs of successive court challenges and the internal cost to Apple in terms of the time spent on the project.

While Thursday’s formal decision by Apple to walk away will surprise and disappoint many in Athenry and in Government circles, the writing has been on the wall for some time.

Commitment

Doubt over the tech giant's commitment began to intensify last November after Cook failed to give Taoiseach Leo Varadkar a commitment about the project. The Taoiseach subsequently gave a written assurance to Apple saying the Government and the IDA would "do all we can" to support the company's stalled plans.

But neither can fast-track what appears to be a deadly slow planning process. The difficulties it presents were thrown into sharp relief by a parallel process Apple was running for a data centre in Viborg, northern Denmark. Announced at the same time as the Athenry site, it is now operational.

If Apple, or any tech company with a similar financial clout, can't get what they want or require in Ireland, they'll just go elsewhere

Apple has since announced plans to construct another Danish data centre in Aabenraa, in the south of the country.

Apple's Nordic manager, Eric Stannow, told Reuters last year that "the reliability of the Danish grid is one of the main reasons we will operate two sites in Denmark".

Denmark’s abundance of wind energy and biomass mean the plants there can run on 100 per cent renewable energy. One would have thought that, for Daly – who seems to value the environment quite substantially – Apple’s 2015 commitment to run the centre 100 per cent on renewable energy, and Ireland’s current lack of capacity in that regard, would have seen the company invest to make good on its promise. That, of course, is now a moot point. What the Danish situation shows us bluntly is that business is easily transferable.

If Apple, or any tech company with a similar financial clout, can’t get what they want or require in Ireland, they’ll just go elsewhere. That presents concerns surrounding future data centre development, especially considering Daly doesn’t appear likely to be reassured about his concerns over the strain on the national grid. Recently, he was involved in a separate appeal against Amazon’s €1 billion planned data centre in north Dublin.

‘Undermine’

"Delays in planning undermine our national competitiveness," Chambers Ireland chief executive Ian Talbot said, calling for a more extensive "end-to-end review of our planning system, including addressing third party planning rights and spurious objections".

While the broader planning system may well need to be addressed, this particular project went south because it wasn’t foreseen that someone, somewhere could possibly cause an extensive delay by objecting.

Neither the IDA nor the Government come out of this process well. However, the IDA appears to have learned a lesson and was last year considering seeking advance planning permission for future data centres to avoid disputes like the Apple one.

For now, the people of Athenry have lost a significant investment. Some suggest that all has not been lost, but this site is still owned by Apple and will presumably remain undeveloped until new owners are found.

Whether they’ll have the deep pockets required to do anything with the site remains to be seen.

But the mess hasn’t been good for Ireland Inc and there’s a job of work to be done to persuade big business that the fields of Athenry are for developing.