‘No computation without generation,’ say Irish authorities

Irish authorities are proposing strict new rules for data center operators that will require new facilities “to provide generation and/or storage capacity to match the requested data center demand capacity.”

Ireland is a popular location for data processing because of its low corporate taxation and relatively relaxed approach to data protection compared to the rest of the European Union, and this has led to a glut in demand for data center capacity that, in turn, has put pressure on the electricity grid.

The new recommendation is an example of the strict approach to data center expansion plans many nations are having to take. It‘s contained in the Proposed Decision on a new electricity connection policy for data centers released this week by Ireland’s Commission for Regulation of Utilities (CRU), the nation’s independent regulator of energy and water.

Its purpose, the CRU said, is to consider network and supply constraints when connecting new data center customers to the electricity grid “while minimizing, where possible, potential impacts on national renewable energy targets and carbon emissions.”

The CRU is inviting comments on the document, which it said provides “clarity on electricity grid connection policy for data center development in Ireland,” from any interested parties by April 4; a final decision will be published later this year.

Growth planning required

“What we are seeing with this announcement is a great example of why organizations, or more specifically data center operators, need to approach growth planning,” said Gartner Director Analyst Autumn Stanish. “No longer is it just about economic opportunity, but grid stability and social acceptance.”

Much of Ireland’s progress, she said, “has been driven not just by regulators at the local or national level nor by utility specialists, but by citizens rising up and making it known what they will and will not support. Therefore, there’s a new and complex social component that they’ll need to consider in a way that they never had to before.”

Back in 2023 Stanish predicted that, by 2028, more than 70% of multinational enterprises would alter their data center strategies due to limited energy supplies and data center moratoriums, up from only about 5% in 2023.

“It has been interesting watching this trend evolve as expected, with Ireland being a major force in this conversation since the boycotts against data center growth started a few years ago,” she said.

Fair, equitable, and stable electricity allocation, she said, “means that the availability of electricity for digital services is not guaranteed in the future, and I expect these policies, data center moratoriums, and regional rejections will only continue and expand moving forward.”

Stanish pointed out that this trend is not just occurring in Ireland. “Many studies show that, globally, enterprises’ digital technologies are consuming energy at a faster rate than overall growth in energy supply (though, to be clear, these studies mostly assume a static position on energy efficiency of current technologies, and don’t take into account potential for nuclear or hydrogen to assuage some of these supply issues).”

If taken at face value, she said, this means that a lack of resources could cause widespread electricity shortages in data centers over the next several years.

To mitigate this, Stanish said, “so far, data center moratoriums and related constraints (including reduced tax incentives) have been enacted in the US (specifically Virginia and Georgia), Denmark, Singapore, and other countries, in response to concerns about the excessive energy consumption of IT, particularly regarding compute-intense AI workloads and concerns regarding an IT energy monopoly in certain regions. As a result, governments (federal, state, county, etc.) are working to ensure that consumption does not outpace capacity.”

Changes needed

In its report, the CRU stated, “a safe and secure supply of energy is essential for every aspect of our society and economy. It is important that households and businesses are confident that their reasonable demands for electricity can be satisfied. A major challenge facing every country, including Ireland, is how we maintain security of supply at reasonable cost, while decarbonizing our generation of electricity and facilitating economic growth.”

Stanish said what is happening in Ireland and elsewhere means that a few critical changes will need to be made for any data center planning (including colocation), and these include:

• Regulatory requirements “will enforce a greater level of sustainability performance from data centers, including reducing energy consumption, water consumption and waste generation. Water and heat reuse as a contribution to local communities is a growing priority for many.”
• New data centers “will require up to 100% renewable energy through on-site renewable energy generation to be approved, negating the potential to use virtual power purchase agreements or renewable energy certificates for sustainability purposes.”

There will also, she said, “be more pressure and incentives to move ahead with emerging renewable energy sources, such as small modular reactors (SMRs) or green hydrogen. Finding solutions around governmental or bureaucratic bottlenecks around these may be the first step to achieving greater scale in these high demand locations.”

Another concern, she said, “would be the growing fear of energy elitism, where major power purchasers (such as the cloud hyperscalers) buy up most of the local and/or affordable renewable energy capacity, leaving everyone else with only traditional (and potentially more financially volatile) natural resources.”

The CRU Proposed Decision, said Stanish, “addresses some key concerns with dispatchable generation and location, but doesn’t outline broader grid contribution and affordable access challenges. This is another category that I would encourage organizations to think about when proposing data center expansions or new builds. Though it’s not a requirement today, I would expect it to be more widely considered in the future.”

She added, “what we are seeing with this announcement is a great example of why organizations, or more specifically data center operators, need to approach growth planning. No longer is it just about economic opportunity, but grid stability and social acceptance.”