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Una Mullally: Why are we facilitating data centres?

Government decides to not just swallow industry’s spin, but repeat it as policy

The future of the Irish data centre industry was looking very bright last week, at a gathering in the RDS in Dublin called DataCentres Ireland, now in its 10th year. This conference brings together data centre companies, and the ancillary companies that service them – everything from cooling systems to security – and offered an excellent insight into what the industry is thinking. The emerging themes I found most interesting were nuclear power, greenwashing, fighting bad press with positive PR, and building more data centres on the west cost.

The Government is a champion of data centres, laying out its plan for a “more, more, more” approach in 2018, when Heather Humphreys echoed the desires of the data centre industry by framing it as “critically important to ensuring that Ireland continues to be a leader in the digital economy”.

Government policy follows the line from the industry that because we have so many tech companies here, “The reality is many of those companies need data centres to facilitate their activities and continued growth.” And given the energy capacity pressure in Dublin, “we need to look at putting data centres in regional locations which might be under less pressure”, Humphreys said at the time.

Bending over backwards for Big Tech is not a novel yoga pose for Ireland. We became a global tax pariah by designing our tax regime in a particular way so that multibillion-dollar companies could channel their profits through Ireland, and root their intellectual property here in order to pay less tax and make more money. We were also told two contradicting things at once about that: without those deals in place, the tech jobs would go; and also that tax had nothing to do with tech basing itself here and in actual fact these companies just love our educated workforce.


New fictions

Now, there are two new fictions being spun. The first is that without data centres, tech companies will not find Ireland a hospitable place. This used to be the line about corporate tax. The second fiction is that we need data centres to help Ireland reach our renewable energy targets. This spin is central to the data centre industry, as the burden the industry places on electricity is huge. The industry cannot get away from this fact, but it also knows that the Government has dawdled on investment in renewables, so is framing itself as rescuing Government targets.

We are told that without data centres, tech companies will not find Ireland hospitable. This used to be the line about corporate tax

With Ireland’s data centre boom, we are witnessing industrial development on a massive scale. I heard one speaker talk enthusiastically about how Ireland should become the data centre capital of the world. Yet curiously, it’s rare to see an Irish politician attempt to draw publicity for a big announcement about a new data centre opening, or cut the ribbon on a new mega-site. The reason is the Government knows the proliferation of data centres in Ireland is a bit of a dark art. They know they don’t create meaningful long-term employment, they know they are placing huge pressure on our electricity grid, and they know they cannot point to tangible benefits to the local economy.

When the chief executive of the IDA, Martin Shanahan, spoke on RTÉ Radio recently, the spin he chose collapsed upon its articulation. He called data centres the factories of the 21st century. This is obviously ridiculous. Factories are the factories of the 21st century. Data centres do not have large workforces and they do not manufacture anything. They centralise, store and process data.

When Leo Varadkar spoke at an Oireachtas committee back in June, he equated data to gold or diamonds, a laughable comparison, as if Ireland suddenly had an abundant new natural resource, as opposed to a new industry that is squeezing our resources. Varadkar’s characterisation of the industry is either cavalier in its ignorance, or blithely disingenuous.

Ethos undercut

At the conference, the audience heard that Ireland’s data centre load is underwriting renewable energy investments. I think the average person assumes an increase in renewable energy is both a transitionary and “swapping” process – that what used to be generated by fossil fuels will now be generated by wind, wave and solar sources. But that’s not what’s happening. What is happening is that tech companies are ploughing investment into renewables, and a lot of the energy created will be used to power data centres. This totally undercuts the ethos of a green transition in terms of energy generation.

Tech companies are ploughing investment into renewables, and a lot of the energy created will power data centres

Also on the table was nuclear power, framed as an inevitability given the energy demands of data centres globally. If you think this is alarmist, it’s already happening. Rolls-Royce is talks with Amazon about providing SMRs (Small Modular Reactors) to power data centres, and is funded by the UK government to design an LCN (Low Cost Nuclear) reactor.

You can’t blame the data centre industry for proceeding with its intended plans, but I’m at an absolute loss as to why the Government is facilitating this industry in expanding at the rate it is. Government isn’t just swallowing the industry’s spin, but repeating it as policy. The industry is very aware of bad press, something that was repeatedly discussed at the conference.

Data centres will be using 30 per cent of our electricity – with some projections as high as 70 per cent – by the end of the decade. This is untenable. It simply cannot happen, but that’s where we’re going. By comparison, Germany is projecting that by 2030 data centres will make up 2 per cent of its national electricity demand. We are staring down a barrel here, and while we know Fine Gael will happily dance to whatever tune big industry plays, it is frankly mind-boggling that the Green Party in government is allowing this to come to pass.