A pioneer in data centre expansion, Ireland is a cautionary tale as artificial intelligence drives a surge in global energy demand, much of it met with fossil gas.
The enormous constraints data centres already place on Ireland’s electricity grid led to an effective moratorium on new connections in recent years.
That has now been lifted under the Government’s drive to expand the sector, as a new policy from the Commission for Regulation of Utilities (CRU) sets the conditions under which data centres may connect to the electricity grid.
Data centres above a certain scale must build their own on-site power-generation capacity or battery storage to be able to meet their own energy needs independently of the electricity grid.
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A six-year “glide path” is allowed before data centres must demonstrate that 80 per cent of their annual electricity needs are matched by generation from new renewables capacity. This is a weak provision: fossil gas is likely to be the only energy source that can scale at the pace necessary to meet the enormous energy needs.
The CRU’s position, contested by NGOs, that it does not have the legal authority to regulate greenhouse gas emissions means that it did not evaluate the policy’s impact on national decarbonisation obligations or fossil fuel imports.
However, it disclosed a market intelligence figure that is staggering in its implications: up to 5.8 gigawatts (GW) of new data centre capacity is anticipated in the medium term, beyond what is already contracted and included in national energy and emissions projections.
This demand is framed as manageable because it will not burden the electricity grid. But if managing the grid requires more fossil fuel demand – which this policy is likely to cause – it will have a major impact on our climate and energy security obligations.
If this demand materialises, the consequences could be severe across several statutory and policy targets, including carbon budgets, the renewable electricity target, the EU Energy Efficiency Directive and the Government’s stated commitment to radically reduce fossil fuel dependence.
Peak electricity demand from data centres would exceed that of all other electricity users in Ireland. Moreover, the additional annual gas demand could offset, and even significantly exceed, the decline in gas use across our entire electricity system under current policies. Instead of gas demand and emissions falling this decade and beyond, they could increase.
These findings are not a worst-case scenario – the actual outcomes could be considerably worse.
The central issue is straightforward. Data centre demand is so large, spatially concentrated, inflexible and growing so quickly, that neither the electricity grid nor renewable generation can keep pace. Fossil gas is filling that gap.
An example is a development in Ennis, Co Clare, that was recently given the green light. Two-thirds of this data centre will be powered directly by on-site gas generation, and projections of its greenhouse gas emissions range from about 10 to 20 per cent of the total emissions ceiling for the electricity sector in 2030.
Multiple similar projects, some significantly larger, are under development, but no serious analysis of the impact on Ireland’s energy system or emissions has been undertaken.
This dynamic is also visible in a trend internationally for “off-grid” data centres whose massive scale is difficult to convey. In West Virginia, for example, Monarch Compute Campus is planning an 8GW “microgrid”, entirely fuelled by fossil gas.
This would consume more electricity than the city of London. Microsoft is planning to commission part of this development: one estimate suggests this could increase emissions from Microsoft’s data centre operations by 40 per cent.
Proponents of the sector often argue that data centres support our climate goals by accelerating renewable energy deployment. But the relevant question is not whether renewables grow, but whether fossil fuel use falls.
If new renewable generation is absorbed by new demand rather than displacing existing fossil fuels, emissions do not decline. Ireland’s experience to date suggests this is exactly what is happening.
Claims that fossil gas can later be replaced with biomethane or hydrogen also do not resolve this problem. Climate outcomes, and legal carbon budgets, depend on cumulative emissions, not on theoretical fuel switching decades into the future.
These justifications cannot escape the mathematical limits created by carbon budgets, which are physically grounded and cumulative.
As an early mover, Ireland has an opportunity to show data centre growth can be genuinely compatible with serious climate commitments.
Data centres could be required to grow without any new fossil fuels, and only with additional renewable capacity, matched to demand in real time rather than on an annual basis. That would align the sector with Ireland’s climate objectives.
Instead, the current policy embeds fossil gas at the heart of the sector’s expansion. The window to change course is closing.
Hannah Daly is professor of sustainable energy at University College Cork
