Ireland’s data centre appeal “is fading” with the surge in electricity demand placing “unprecedented pressure” on the national grid, and Government reforms likely to lead to a short-term reliance on gas, according to a report by Barclays.
The report said a 2021 moratorium on new grid connections in Dublin, which is effective until 2028, has stalled growth.
“While the moratorium aimed to ease grid pressure, progress has been slow,” it said. “Planning delays, judicial reviews and lack of major grid upgrades have left Ireland struggling to keep pace with global peers in building AI-ready infrastructure.”
Electricity demand from data centres has surged to 22 per cent with forecasts hitting 31 per cent by 2030. That figure is up from 5 per cent in 2015. By way of comparison, data centres worldwide consume 1-2 per cent of overall power.
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Ireland’s data centres consumed 6,969 GWh of electricity last year, which represented a 10 per cent year-on-year increase, significantly outpacing the 3 per cent growth seen in peer countries.
Ireland recorded a new peak electricity demand of 6,024 megawatts (MW) on January 8th, while EirGrid forecasts peak demand will exceed 7,000MW by 2034.
Overall, electricity demand is expected to grow by 45 per cent in a median scenario between 2023 and 2034, with data centres and AI infrastructure emerging as the primary drivers.
“These trends signal an urgent need for strategic energy planning, infrastructure upgrades and policy innovation to ensure grid resilience and sustainable digital growth,” the report said.
It said “persistent grid constraints, regulatory bottlenecks and growing uncertainty” around future energy availability have forced data centre operators to “rethink their strategies”.
It added that a future construction pipeline of €8 billion to €10 billion is at risk due to energy constraints and planning delays.
Operators, including the likes of Microsoft and Google, are “scaling back” and shifting graphics-heavy workloads to regions such as the Nordics.
The report noted Government reforms to the sector aimed at encouraging data centres to evolve from passive energy consumers into active, grid-supporting infrastructure are in effect asking data centres to “operate more like utilities”.
“But we believe this is easier said than done,” it said. “And the limited progress on renewable deployment makes us think that gas reliance will be the most realistic option in the short term.
“Overall, we believe the proposal is unlikely to be enacted in its current form, given the near-term execution challenges ... we think substantial revisions are likely to be needed.”
The report says the scale and speed of data centre expansion has “outpaced” the ability of the grid and renewable infrastructure to keep up.
“Wind and solar are expected to scale more gradually, with total renewable generation increasing at an annual average rate of 22 per cent between 2024 and 2030, leaving fossil fuels to fill the gap in the interim,” it added.
