A DATA CENTRE report from the Department of Enterprise did not include a section on the potential for higher electricity prices due to rising data centre demand, despite the terms of reference suggesting it should.
The tender document that set out the specifications of the report, seen by The Journal, requests the tenderer – in this case KPMG – to assess the “challenges and potential disadvantages” with further data centre development in Ireland beyond 2030.
These terms of reference, as previously reported by Dublin People, provide an example of rising electricity prices as one such potential challenge.
It states there is a “potential for increases in electricity prices related to any grid infrastructure developments required to support further data centre development”.
But when the final KPMG report was published at the start of June, rising electricity prices was not included among the potential challenges.
Instead, it states that Ireland’s electricity grid “faces pressure from rising demand and grid constraints”, adding that beyond 2030, “this will limit the potential for new data centre connections”.
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A proposed solution to this challenge involves aligning “data centre development, transmission upgrades and regional energy planning”, according to the report.
But it does not mention the potential for these grid upgrades to lead to increased electricity costs, as the terms of reference had suggested.
It was previously reported that this report cost the Department of Enterprise over €100,000 to produce.
The terms of reference was obtained by Sinn Féin MEP Lynn Boylan under the Freedom of Information.
She told The Journal that the government were aware of the impact of data centres on electricity prices, pointing to the terms of reference which suggested the issue should be examined.
“Yet, €100,000 of taxpayers’ money later,” she said, what she believes is “the core question” had not been addressed.
A recent study commissioned by environmental groups Friends of the Earth and Beyond Fossil Fuels found that Ireland’s reliance on fossil fuels for electricity – primarily natural gas – combined with increasing grid pressure from data centres, has led to additional electricity costs for Irish households.
It found the average household may have paid an estimated €360 in additional electricity costs between 2015 and 2023 due to data centre demand putting upward pressure on wholesale electricity prices.
The dependency on gas and continued demand for data centres may also lead to further price increases over the next decade, with the average household potentially paying between €295 and €644 more for electricity between 2025 and 2034, according to the study.
A spokesperson for the Department of Enterprise told The Journal the aim of the report was “to determine the economic impacts and wider societal benefits” arising from data centres and to explore the “evolving the data centre landscape beyond 2030 with a view to optimising future economic and societal benefits”.
They added that the report delivered on these aims and that its focus is “consistent with the remit” of the Department.
A spokesperson for KPMG referred a request for comment to the Department of Enterprise.
Data centres ‘an opportunity for renewables’
The KPMG report also states that “data centres present a significant strategic opportunity for Ireland’s renewable energy transition” as their demand for electricity can fund renewable projects through corporate power purchase agreements.
But The Journal Investigates has previously reported how many of Ireland’s recent data centre projects are turning to fossil fuels, such as natural gas, to run their power-hungry operations.
The investigation found that a number of planned data centres in Ireland will use natural gas, either by connecting to Gas Networks Ireland or by using onsite generation to produce electricity due to challenges connecting to the grid, especially in Dublin.
Following a decision from the Commission for Regulation of Utilities in December last year, which lifted the de facto moratorium on data centres in Dublin, new data centre connections to the electricity grid will be required to meet at least 80% of their annual energy demand with additional renewable electricity projects.
But data centres will be given six years from operation to meet this 80% figure.
Corporate power purchase agreements have also been criticised by scientists, who argue that while they are a step in the right direction, offsetting emissions is not the same as using clean energy the whole time.
The government’s Large Energy User Action Plan, published earlier this year, also seeks to build more data centres across the country, particularly in regional locations where there is generation capacity.
A Labour motion calling for a levy on data centres to recover the high energy costs they are adding to household electricity bills and a moratorium on future development was voted down by the government in the Dáil last week.
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Conor O’Carroll is an investigative reporter with The Journal Investigates.
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