Data centres ‘scapegoated’ for electricity supply crisis, IDA records show

The IDA flagged concerns that data centres were being “scapegoated” for a crisis in electricity supply that had led to warnings of power blackouts.

An internal briefing note based on international investor feedback said data centres were being portrayed as the “culprit for current electricity problems” when supply issues were “clearly” the cause of the problem.

In other internal records, the IDA explained how an electricity supply crunch had been expected in Ireland, but not until about 2026, and that supply issues were already “impacting on investment decisions”.

A briefing note prepared for Kieran Donoghue, their global head of strategy, public policy and international financial services, said Ireland had traditionally scored well in client surveys for security of electricity supply.

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The note was prepared ahead of a meeting between him and a senior official from the Department of the Environment.

It said in the past concerns had generally been around the “cost of energy” and that IDA clients were generally supportive of sustainability.

The briefing note said: “At a broad level, Ireland, within the EU, is generally seen by investors as relatively good on business regulation (ie not overregulated). This helps provide a competitive advantage for Ireland.”

However, it said planning – especially delays and legal challenges – were a “big concern” for potential investors, including those looking to “go green” or pursue renewable projects.

Capacity auctions

It said concerns had been raised over how data centres were being blamed when power shortages were caused by “two power plants [having been] down” and disappointing uptake from electricity capacity auctions.

The briefing, which dates from early November, also said data centres should not be looked at in isolation to jobs linked with the other activities of their owners.

It said: “There is [a] direct link between data centre establishment and job creation. Large energy users include more than data centres.”

Particular concerns were raised about electricity supply in Dublin and the greater Dublin area, it said, with significant investment required.

The briefing said the IDA could help in bringing new technologies to Ireland and that its clients wanted 100 per cent renewable electricity.

It said: “The vision that Ireland can be a global leader in renewable electricity generation and distribution (akin to Saudi Arabia and oil) needs to underpin the country’s approach to energy.”

The briefing said the answer was not the “restricting of electricity supply to LEUs [large energy users] such as data centres, as some interests propose as a solution”.

Gas-fired generation

A meeting of the IDA Ireland Executive in mid-October also heard how Ireland’s energy supply problems had not been expected so soon.

An executive summary for the meeting said: “It was anticipated that it would be about 2026 when there would be a ‘sizable tightness in the electricity market’, but, being six years out, there still would be reasonable time to take necessary action to ensure the ‘tightness’ would not occur.

“Unfortunately, what has happened since is that there have been unanticipated issues around gas-fired generation, which has led to more immediate supply problems.”

A management committee communique from November also flagged the security of electricity supply as a serious issue and “impacting on investment decisions”.

It said: “The issue has been raised at the very highest level of government, with a meeting of secgens [secretaries general of departments] on the subject this week. The next step is taking client feedback to Cabinet.”

The paper said that large energy users thinking of investing in Ireland were increasingly aware of the problems and were re-evaluating based on “electricity supply, security, redundancy, cost and sustainability”.