Data centres and their impact on the price and supply of electricity

According to the Central Statistics Office (CSO) 2022 electricity consumption report, data centres in Ireland are now using the same amount of metered electricity as urban dwellings at 18%, and almost double the electricity of rural homes which rests at 10%. 

Data centres are now consuming 31% more electricity than they were in 2021. There has been a 400% increase in electricity consumption by data centres from January to March 2015 to October to December 2022.

These startling revelations from the CSO have left many people wondering whether data centres’ increasing need and reliance on the electricity grid are impacting Irish households' electricity supplies and are causing the cost of electricity to rise even further. 

But before we investigate this, let’s take a look at what data centres are and the impact they’re having in Ireland. 

What is a data centre and what are they used for?

It is a facility that houses a network of computers, storage systems, and computing infrastructure that organises and stores large amounts of data. 

Similar to a computer's external hard drive that holds your documents, data centres store the data information behind every action you take online. 

As more of our day-to-day life moves online the necessity of data centres is undeniable.

For example, when you use an online banking app, send an email, stream a video, or send a message on WhatsApp, the data from these activities are stored and organised in a data centre. Without these centres, these actions wouldn’t materialise.

In fact, streaming services such as Netflix or Amazon Prime, account for 50-60% of all data centre electricity usage, due to video and graphics being data intensive.

Are there any data centres in Ireland?

Yes, there are.

Ireland is an attractive destination for data centres due to our low corporate tax rate, strong data protection regime, cool climate, educated workforce, and central geographical location between the US and Europe. 

There are currently 82 centres operating here, with the majority, 78, of these being located in Dublin, which is the largest data centre hub in Europe. 

As of 2018, Ireland was home to 25% of the data centres in Europe. Therefore, it comes as no surprise that data centres are using a higher percentage of electricity in Ireland, in comparison to other European countries. 

According to a 2020 study by the European Commission, on average data centres accounted for 2.7% of Europe's electricity consumption in 2018. This is expected to rise to 3.2% by 2030. However, in Ireland this figure currently rests at 18%, with EirGrid estimating this could rise to 30% by 2030, 10 times more than the projected European average, highlighting the unparalleled reliance on the electricity grid data centres in Ireland have. 

Are data centres putting a strain on the national electricity grid?

Yes, they are.

The national grid in Ireland has been under considerable strain since 2021. 

This can be seen in the number of amber alerts the electricity grid has experienced in recent years. An amber alert is a warning that grid operators make when they believe they do not have enough electricity supply in reserve if something was to falter in the power system. 

According to EirGrid, the State’s electricity grid operator: 

• There were 8 amber alerts in 2022
• Between December 2020 - October 2021, there were 7 amber system alerts on the electricity grid
• Between 2010 - 2019, there were just 13 amber system alerts over almost 10 years 

The recent frequency of amber alerts demonstrates the increased amount of pressure and demand on the power system for electricity. 

According to Dr Paul Deane of University College Cork (UCC), the 32% growth in electricity consumed by data centres between 2020 and 2021 was the equivalent of adding over 200,000 homes to the grid.

EirGrid has also flagged its concerns surrounding these electricity demands as it projects that the electricity usage of data centres could increase by another 12% by 2030. 

Will data centres be affected if the grid experiences energy blackouts?

No, they won’t.

Data centres have large backup generator systems built into their design to ensure that they have power in the event of a power outage. 

Although these emergency generators are typically only meant to be used for short periods of up to 72 hours, an industry expert has predicted that many data centres could operate indefinitely depending on the system they have, if a long power cut occurs. 

The upkeep of data centres is essential as they are needed to power critical infrastructures such as healthcare, communications and banking. 

Are data centres bad for the environment?

Data centres have been criticised heavily for their negative impact on the environment because they eat up a lot of resources. 

According to one estimate, in 2020 they produced 1.85% of Ireland's carbon emissions. 

The national grid powers data centres with electricity that is generated by the burning of fossil fuels and renewable energy. As a result, data centres are playing a role in the negative impact born from burning fossil fuels. 

This is worsened by their use of on-site gas and diesel generators. 

According to Dr Patrick Bresnihan of the National University of Ireland, Maynooth, in one day an average centre by itself uses:

• The same amount of energy as a town the size of Kilkenny (60 MW) 
• Up to 500,000 litres of water to cool down its systems
• Potentially up to 5 million litres of water during a heatwave

These figures highlight the real concern surrounding the energy consumption and environmental impact of data centres in Ireland. 

Are data centres becoming greener?

Due to Ireland’s mild climate, less water and electricity are needed to cool the centres here than if they were based in warmer countries. However, even with Ireland’s climate helping to slightly lessen the impact data centres have on our environment, their consumption of electricity and other resources remains damaging and adds to our country’s carbon footprint. 

If Ireland is to achieve its Climate Action Plan goals for 2030, 80% of the electricity consumed in Ireland must come from renewable sources. According to the Sustainable Energy Authority of Ireland (SEAI) in 2020, only 42% of Ireland’s energy came from renewable sources, such as wind and hydro energy, meaning we have a long way to go. 

To ensure Ireland meets this target and to reduce their centres' carbon footprints, several data centre companies have pledged to become more energy efficient.

For instance:

• Google aims for its data centres to be powered by carbon-free energy by 2030. Their move towards energy efficiency is seen by their use of outside air for cooling to reduce power usage. 
• Amazon’s data centre in Tallaght, Dublin, will recycle its excess heat (created when cooling its data banks) into the community’s district heating system, which will help offset its carbon footprint and provide heat to local homes and buildings. The company also has invested money in the construction of wind farms in both Cork and Donegal to further offset their electricity consumption.
• Microsoft has partnered with SSE Airtricity to install solar panels on schools across the country to help offset their energy usage. 

However, the commitment these data centres have to truly reducing their carbon footprint is up for debate. For example, Microsoft, a company that currently has 15 data centres in Ireland, has received approval to build an onsite power plant, and 21 diesel-powered generators to power its new €900m data centre in Dublin. 

This plan, which aims to lower Microsoft’s reliance on the national grid, required the company to receive a special industrial emissions license from the Environmental Protection Agency, indicating that Microsoft’s agenda of offsetting the environmental impact its centres have and lessening its carbon footprint here leaves much to be desired.

Are data centres increasing the price you pay for electricity?

Technically, yes they are. 

Data centres consume copious amounts of electricity from the grid, therefore demanding more of the electricity supply, which in turn causes the prices of electricity to increase. 

However, it's important to note that data centres only play a part in the increasing cost of electricity bills. 

Currently, Ireland has the 3rd highest electricity prices in the EU. There are several reasons for this, such as our:

What is the future for data centres in Ireland? 

Although the number of data centres and their electricity needs are set to rise in Ireland, the concerns regarding their expanding appetites have been highlighted by the Government and other organisations. 

For instance: 

• The Commission for Regulations of Utilities (CRU) now reserves the right to impose future moratoriums on the adding of new centres to the grid if it threatens the security supply of electricity. 
• EirGrid has stated that no new data centres will be built in the greater Dublin area until at least 2028, as the grid supply for Dublin is at its limit. 
• EirGrid has also halted talks with potential data centres seeking to gain access to the grid unless they meet certain criteria outlined by the CRU.

Although these actions have been taken to safeguard the electricity supply, national grid and the environment, the question still remains will these proposals actually make a difference?

As a country, we can only wait and see what transpires in relation to the expanding consumption of electricity by data centres, and their impact on the cost of our electricity bills and the environment.

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Read our top tips on how to lower your electricity costs

If you’re struggling to pay your electricity bills, check out our articles on the topic

• Our energy Quickstart Guide outlines how to compare, apply, and switch energy providers on our site.
• Discover 15 ways to lower your electricity usage and save money here. 
• If you're struggling to pay your electricity and gas bills, take a look at our piece on the supports available for you.

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Main sources

eirgridgroup.com, cso.ie, ec.europa.eu,seai.ie, cru.ie, independent.ie, irishtimes.com, greennews.ie, gempool.ie