Is our open-arms policy on data centres coming back to bite us?

Net Results: Data centres’ high energy use may be to blame for loss of chip-making jobs

 

Ireland may have experienced the first large-scale adverse result from its misjudged open-arms policy towards data centres: the loss of a multibillion euro Intel chip fabrication plant which would have brought thousands of jobs along with it.

Intel has not yet confirmed the site for the new facility but Bloomberg is reporting it as Germany, and well-placed industry sources told me this was the understanding.

Reports have noted that Intel has had three main concerns with Ireland as a new plant site: energy limitations, water supply uncertainties and the drawn-out planning process here. Germany had been noted for months as the shortlist front runner. It may even be, as someone told The Irish Times , that Ireland was never in serious consideration.

But even if that’s true, Ireland’s failure to feature as a persuasive shortlist candidate would be just as much of an indictment, if not more, of short-sighted national policy.

At the very least, Ireland’s unsuccessful bid shows that by pursuing a low-employment, moderate-value sector of foreign direct investment, the State has backed itself into an unstable energy and water supply corner that puts higher value projects at risk.

Both energy and water are consumed by data centres at such scale that they place significant demands on public supply. Planning documents filed for data centre projects indicate a single large facility would use more than 300,000 litres of drinking water a day, increasing to 4.5 million litres a day during parts of the year.

Energy demands

Energy demands are also a major concern. Eirgrid has outlined supply problems, noting in a report last summer that a single centre has the same electricity demands as a large town. By the close of this decade, data centres could account for a third of all Irish electricity use, according to the report, a staggering proportion for a country that still relies heavily on importing energy to meet needs, with little prospect in this decade of fulfilling complex and costly offshore wind energy developments to meet current or future needs.

Meanwhile, Eirgrid warns of possible energy blackouts, now addressed to some degree by bringing back mothballed facilities, which see the State having to use polluting fossil fuels to meet basic national energy demand – and keep Ireland’s 70 data centres running.

And another 30 centres are on the cards. Yes, new centres may now have to generate their own electricity to meet their needs when pressure is on the public system, but this would utilise diesel-fuelled generators that increase carbon emissions while enabling centre operators to avail of the cheapest, untaxed diesel. And we are far behind on meeting our EU climate obligations.

The data centre issue now looms so large that the Oireachtas held hearings on it last October. Aoife MacEvilly, chairperson of the Commission for Regulation of Utilities, told the hearing that electricity demand from this sector is rising “more quickly and easily than it has proven possible to deliver the supporting transmission and generation infrastructure”.

This is astonishing. Why weren’t planning approvals shaped to suit energy supply? Yes, Ireland needs some data centres, but not at the unmetered scale at which the sector has grown. Amazingly, the largest concentration of data centres in the EU is in Dublin.

Secretive sector

And it’s a secretive sector. In the US, some companies – notably Google – have used shell companies to develop centres, while in the EU critics say others, including Facebook/Meta and Microsoft, have built centres with inadequate public engagement. Journalists have had to resort to freedom of information requests to reveal data centre plans that directly impact energy, water and land use in local communities.

In Ireland, the sector only recently decided to respond to public concerns. It has organised into a lobby association, putting forth arguments that Irish data centres have a positive economic impact in creating third-party high-value jobs, stimulating the economy and (supposedly) luring even more multinationals here.

Yet there’s little concrete evidence provided for this, and such claims are regularly derided by the tech people I talk to. After construction, data centres have a tiny staff, perhaps 30 people, mostly on moderate-wage shift work. Plus, the cloud-computing vision sold to us is that data, knowledge workers and data users can be anywhere. But, suddenly, this is not true? Data has to be in Dublin or Netflix will shudder to a halt, Zoom meetings will disconnect and multinational jobs will vanish?

Meanwhile, guess what kind of facility creates thousands of construction and engineering jobs that roll on to thousands of skilled, well-paid technical and development jobs and a huge, high-value supporting economy featuring indigenous companies? Why, a chip fabrication plant.

Chip facilities also have city-size energy and water demands to accommodate. But the economic value of one chip facility extends miles and years beyond any number of data centre boxes along the M50. If we hadn’t traded away so many resources on low-value, low-hanging data centre fruit, maybe we could have been a chip (and other) facility contender.

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