Bête noire and cause célèbre: data centres have somehow managed to become both simultaneously. For some they are vampiric energy and water consumers with an outsize impact on climate change. For others, they are a critical piece of the digital infrastructure that supports the knowledge economy as well as the high-tech giants that make an even more outsize contribution to the exchequer.
Does their economic and technological importance outweigh their environmental impacts? Won’t turning them away from Ireland simply shift the environmental impact to another part of the same planet? Are there ways to mitigate that impact and reduce their resource consumption that would assuage their critics? If not, can we afford to do without them?
Data centres are an important part of Ireland’s overall FDI proposition, as they provide the secure, resilient and high-performance digital infrastructure on which many modern investment projects depend, says Matt Kennedy, global head of client transformation at IDA Ireland. “Ireland’s FDI performance over the past year demonstrates that the country remains highly competitive, but that competitiveness is increasingly shaped by the availability of enabling infrastructure across energy, digital connectivity, talent and innovation.
“IDA Ireland’s current strategy, Adapt Intelligently, identifies digitalisation and sustainability as mutually reinforcing growth drivers. This is especially important in areas such as AI, cloud services, semiconductors, advanced manufacturing, life sciences and financial services, where companies increasingly assess locations on their ability to support data-intensive operations securely, sustainably and at scale.”
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At the same time, IDA Ireland recognises that data centres are large energy users and that their development must be aligned with Ireland’s climate, energy security and infrastructure objectives, Kennedy adds. “The issue is therefore not whether Ireland should pursue unlimited growth, but whether Ireland can support strategically important digital infrastructure in a planned, sustainable and regionally balanced way.
“Where capacity becomes materially constrained, the risk is that Ireland’s ability to win and retain digital, AI and technology-intensive investment is weakened relative to competing locations that can offer both digital infrastructure and a credible clean-energy pathway.”
Patrick Brodie, assistant professor in the School of Information and Communications Studies at UCD disagrees. “The importance of data centres to Ireland’s economy is drastically overstated. Take a Government-commissioned KPMG report, The Value of Data Centres to Ireland, which argued that 876,000 jobs, or 32 per cent of national employment, were dependent on the sector.
“This basically asserts that a huge proportion of jobs that require frequent use of cloud services are dependent on hyperscale data centres being located in Ireland – an irresponsible claim that was widely called out in the media.”
Brodie contends that data centres are a symptom of the privileging of digital and industrial policies that support immense wealth concentration and the disproportionate allocation of ecological resources towards one sector of the economy. “Developmental trade-offs assume that there is also a notable proportion of jobs supported. However, as the KPMG report shows, direct employment is only in the order of a few thousand jobs, and most are exhausted after the construction phase.”
Technology can make a meaningful difference to the environmental footprint of data centres, says Grit Young, EY Ireland technology, media and entertainment and telecommunications industry leader. “More efficient equipment, better cooling and smarter management of workloads can all reduce energy and water use. There is also scope to remove waste, such as servers that consume electricity while doing very little.
“However, efficiency alone will not solve the problem if overall demand continues to grow rapidly. Innovation needs to be matched by cleaner energy and continued investment in the grid. For Ireland, this is why developing offshore wind resources is key. Hyperscalers and major technology companies are ready, willing and able to sign long-term power purchase agreements for renewable energy that will give stability to a project if it can get through the approvals process.”
Brodie argues the key issue is not just impacts, but concentration of resources, infrastructure and ownership. He points out that the global cloud market is dominated by three US companies which have major data centre locations in Ireland. “Amazon Web Services, Google and Microsoft together control around 65 per cent of the global market share.”
He says these tech hyperscalers account for a significant proportion of electricity and water demand in Ireland, including 23 per cent of the country’s electricity consumption. “These are resources that are being directed towards the profits of just a few companies. This is not to mention research showing that data centres’ electricity usage will be directly responsible for Ireland missing its binding climate targets.”
The problem is that the only assessment is based on public infrastructural constraint, meaning solutions are focused on figuring out how to adapt infrastructure for tech growth, Brodie adds. “Policymakers jump through hoops to ensure that the business interests remain happy and investing in Ireland. The problem is thus a short-sighted and reactive industrial policy, which relies on large-scale industrial investment by US FDI companies.
“This cannot be sustainably managed with data centre energy demand, without basically letting these companies run wild and develop their own infrastructure to get around constraints. To be clear, this is what the Government is proposing with the Leap [Large Energy User Action Plan] policies and associated legislation such as the Private Wires Bill.”
It is not a simple choice between economic growth and environmental responsibility, says Kennedy. “Ireland needs a more integrated discussion about the total energy system, the pace of renewable deployment, grid reinforcement, demand flexibility and the role of digital infrastructure in supporting productivity and decarbonisation across the economy.
“Data centres have a real and visible electricity demand, and that must be managed carefully. However, they also support services that are central to the modern economy, including cloud computing, AI, public-sector digital services, financial services, enterprise software and advanced analytics.”
Digitalisation also has the potential to support climate progress by enabling smarter grids, better demand forecasting, more efficient industrial processes, reduced waste and improved environmental monitoring, he says. “The priority should be to move from an ad hoc debate about individual electricity users to a plan-led approach that balances economic opportunity, climate commitments, affordability and security of supply.”
While there is an environmental cost associated with data centres, this must be balanced against the significant economic benefits that technology firms and technology itself bring to Ireland and to the European Union, Young agrees.
“Rather than approaching data centre development on an individual country basis, we should link into a collective European strategy on digital infrastructure and AI,” she says. “Economically and technologically, it is not an option to fall too far behind on AI development, and finding the most suitable locations for this digital infrastructure – from a climate, energy and technology perspective – across the continent should be the focus.”
A complete halt to further large-scale data centre development would send a significant signal to the international market about Ireland’s capacity to support future digital and AI-intensive investment, says Kennedy. “A risk is that investors would interpret it as a constraint on Ireland’s ability to provide the digital and energy infrastructure required for long-term growth. This would also impact the wider sectors that depend on cloud, AI, cybersecurity, advanced analytics and high-performance computing. It could weaken Ireland’s value proposition for technology-led FDI, reduce opportunities for Irish-owned supply chain firms and make it harder to retain activities that require proximity to resilient digital infrastructure.”
This does not mean Ireland should pursue data centre growth without conditions, Kennedy continues. “The more balanced approach is to ensure that policy and infrastructure keep pace with the urgent need for decarbonisation, while enabling strategically important investment where it is aligned with renewable energy, grid capacity, regional development and national competitiveness.”
