Recent figures from the Environmental Protection Agency show Ireland’s greenhouse gas emissions are at their lowest level in three decades.
There was a 6.8 per cent reduction in emissions last year, which followed a 1.9 per cent drop in 2022. This is a material reduction that occurred against the backdrop of a robust economic performance.
Despite this positive trend, the urgency to reduce our reliance on fossil fuels and curb carbon emissions remains critical. From one point of view, an easy win would be to curb the development of data centres.
These facilities are energy-hungry and it has been argued their benefit isn’t immediately obvious to the public, or indeed to Ireland Inc.
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Rather than limiting energy demand, however, my contention is that we should consider increasing it by facilitating the development of more data centres and, in turn, using their presence as a catalyst to accelerate the development of renewable energy while providing a pipeline of demand for it.
At Deloitte, we work closely with several parties involved in the continuing debate relating to data centres including providers, technology firms and companies in the energy sector. This experience has convinced me that data centres and the computing power required to underpin artificial intelligence (AI) innovation are poised to become the cornerstone of advanced economies.
While this increased demand may be unwelcome, it is an unstoppable force, which should not be ignored for the strategic benefit it will create.
It is clear that the new Labour Party government in the UK is seeking to reorientate the British economy. Central to this strategy has been its desire to create an “artificial intelligence sector” and to remove “barriers to new data centres”. Spain has also sought to actively develop its data centre sector, and investments totalling about €22 billion have been announced this year.
Data centres and the increased processing power they house are set to become the factories that produce much of the AI innovation we will come to rely on over the coming decades. Both Spain and the UK have an understanding of their strategic importance.
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Efforts to develop the next iteration of the tech industry here through AI and the decarbonisation of our electricity generation is making progress, but the potential is there to transform both sectors by combining their development.
Currently, Ireland has an effective moratorium on the development of new data centre projects in the Dublin region. This is because we have an energy supply crunch that is likely to take a number of years to resolve, creating a risk of us missing out on the next wave of strategically significant investments.
Rather than viewing the energy demands of data centres as a hindrance, what if we saw them as an opportunity? An opportunity to align the growth of our tech industry with our national goals of decarbonisation. By investing in renewable energy sources and innovative technologies that make data centres more energy-efficient, we could position Ireland as a global leader in both sectors.
Just as has been recognised in the UK and Spain, new data centres should be used to support Ireland’s nascent AI sector. Ireland has an advantage with a mature ecosystem of data centre developers, but we need to accelerate the legislation already in process to enable them to connect data centres with renewable energy resources.
Creating a robust demand base would also help prioritise and streamline the much-needed expansion of our national grid. Like many countries, Ireland faces a grid crunch and the current strategy to manage this involves moderating demand, particularly from data centres. This, however, is a classic case of treating the symptoms rather than addressing the root cause.
When we examine electricity consumption per capita, Ireland is well down the list, in 33rd place, and when we expand the scope to total energy consumption, we fall to 37th place. If we aspire to be a world leader in renewables, we must be ambitious about expanding both our generation capacity and our energy demand. The security of future cash flows for the promoters of renewable generation projects is a critical factor. To ensure the financial viability of these projects, we need guaranteed income streams that span decades.
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This will require investment by the Government, State-zoned land for data centres and, crucially, the promotion and approval of renewable energy sources and the necessary grid infrastructure to support these developments. The reimagining of such projects should be classified as critical infrastructure with an ambitious delivery timeline. The current proposals for a department of infrastructure may plot a path towards creating a much more integrated and streamlined approach to these projects.
As a guiding principle, renewable power generated on these sites – whether from wind, solar or green hydrogen and backed by adequate battery capacity – should aim to produce surplus renewable energy required by data centres. This surplus should in turn be supplied back to an upgraded grid, thus further contributing to the Government’s decarbonisation ambition.
Such a radical approach would require a shift in thinking and action from all sides. Those opposed to data centres would need to consider seeing them as catalysts for decarbonising the country’s energy supply and transmission infrastructure, at a scale previously unattainable.
Meanwhile, the technology sector would have to expand its projects to include renewable energy generation that goes beyond their projected needs. The State would also need to actively enable data centre campuses and prioritise the necessary grid infrastructure.
It will not be easy, but this solution presents a unique opportunity to drive a transformational shift in our carbon emissions and our economy.
– Harry Goddard is chief executive of Deloitte Ireland
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