Dec 23, 2021
The Irish data centre industry was left reeling following an industry update by EirGrid on Friday last. Dublin, the largest data centre market in Europe, looks set to lose its status amongst the high growth European FLAP-D (Frankfurt, London, Amsterdam, Paris and Dublin) cities. Under new arrangements, data centre grid connections in the region are effectively disallowed for the foreseeable future.
This latest development arises from a recent direction by the Commission for Regulation of Utilities (CRU) [see our November blog post] which sets out four criteria for assessing data centre demand applications. Progress of applications is now conditional on the requested connection being located outside constrained regions and the extent to which the applicant can provide dispatchable power generation or demand response.
EirGrid says the “Greater Dublin Region”, an area that extends from Dublin City almost as far north as Drogheda, south towards Arklow and west beyond Naas and Maynooth, will remain constrained for the foreseeable future. While this situation continues, with no access to generation capacity, data centre demand cannot be accommodated.
System constraints arise due to high levels of demand, occurring within a relatively small geographic area, monopolising power supplies and putting strain on the network. Some of the demand may be served from within the region, pushing the local network to its limits. Demand levels have now reached a point of significant dependency on power generated from the western half of the country, much of which nowadays is from onshore wind.
10,000 MW of new generation and €3.2bn of investment is needed to meet future demand. Ireland is far into a journey of becoming a world leader in smart, renewable energy integration. EirGrid plays a central role, managing and coordinating several challenging work programmes, each one ground breaking in its own right. Referring to the Shaping Our Energy Future documents, published earlier this year, EirGrid says the focus is now on delivering against their strategy to deliver these objectives.
Ireland’s strong connectivity and EU/US geographical advantage provides a high attraction for developers across a range of data centres types. In recent years, Dublin has seen a rapid increase in the number and scale of hyperscale facilities owned and operated by the world’s largest digital companies. As well as having high demands on power grids, these very large data centres usually require links to high capacity, low latency fibre communications such as the T50 fibre network. Colocation service facilities, though often smaller in scale, are somewhat more dependent on the benefits of ‘cluster’ development around cities like Dublin.
Not all data centres require such high end connectivity. Less critical, lower tier facilities can tolerate the slower connection speeds that regions with higher power demand capacity might offer. EirGrid offers a cautious and conservative outlook on such locations. Applications will be assessed on a case by case basis. In any event, it is likely that any connection would be dependent on the customer’s provision of onsite generation, subject to onerous and expensive conditions.
The full impact of the lockdown on power demand in Dublin and surrounding areas remains to be seen. Key figures from within the industry have described this is a major blow to foreign direct investment in Ireland. It is understood that some of the leading colocation providers have begun assessing alternatives to planned investment in the Dublin market, including outside Ireland.
EirGrid plans to engage with customers individually over the coming months. Only then will it become clear whether the Dublin market as we know it will disappear, perhaps lost to other countries, or whether it will evolve, leaning into the advantages that Ireland’s highly decarbonised power system has to offer and the data users who might appreciate it.