Data centre growth comes at price for Irish infrastructure

The good news: Ireland is becoming a major international hub for data centres.

The bad news: Ireland is becoming a major international hub for data centres.

You sure can't escape the data behemoths in the headlines at the moment. Apple's proposed €850 million centre in Athenry just got the official go-ahead. Developers are seeking planning permission for a couple of big centres in Cork, now that a new subsea cable is providing internet backbone connectivity. Even Chinese giant Alibaba is rumoured to be sniffing about.

Many of these enormous, air-conditioned warehouses – like Ikeas full of computer servers that store, manage and transfer the digital information that is now a part of everyday business and everyday life – are strung out along the M50, shadowing the high-speed fibre running across Dublin from north to west.

Dozens of companies – such as Microsoft, Facebook, Google and, soon, Apple – have their own bespoke centres, while others either lease space at big generic warehouses or run data centres offering warehousing services. Amazon alone is believed to have about €2 billion invested in several data centres here.

Make a post to Facebook? Order something from Amazon? Pay a bill? Do an online search? All that data involved went through or into a data centre somewhere, perhaps one of these in Ireland, perhaps one (or more) thousands of miles away.

Moderate climate

Why are we awash in these data-storage boxes? As usual with business decisions and developments, there’s no one specific reason, but up near the top is Ireland’s moderate climate. All those servers in centres produce an incredible amount of heat – so much so that some of the newer green designs for them involve reusing that energy to, say, heat greenhouses.

But the key point is that the servers need to be kept cool. That's much cheaper to do if – as sadly is true – the average temperature in our hottest month, July, is just 16°. Compare that with California, where even on the cooler coasts July temperatures average about 21°.

Then there is the usual medley of other reasons: the tax rate, the availability of employees, the fact that real estate is still cheaper here than in, say, London. That so many internet and technology companies are already here is a big factor, as is the clustering effect over time. Once a few big-name company centres were here, others were more likely to come.

A growing reason for interest in Ireland is also, without doubt, the continued focus on the data privacy and data-protection issues around international data transfers. Depending on how international courts rule in coming cases and coming years, and the international view of how the Irish Data Protection Commissioner's office manages complaints, multinationals may prefer – or need – to keep European data within Europe. Given the number of such firms based in Ireland, having an Irish data centre is a smart investment.

The good news is that such developments further place Ireland on the global map not just for data centres but also for business developments generally. They are a complement to business overall, and many firms might prefer a data centre they can easily talk to rather than one that is remote. Such centres boost the construction sector by providing hundreds of shorter-term building jobs, then bed in with a range of permanent positions.

The bad news is that while these monstrous facilities do indeed employ many in their construction, they don’t account for all that many jobs once built. The proposed 32-acre, multi-data centre campus in Cork, for example, would ultimately provide a very modest 150 jobs, according to the developers.

Energy grid

The growth in such centres also poses very serious challenges for Ireland’s energy grid. The average centre uses so much energy that it ends up with an electricity bill of about €160 million (yes, you read the right: million).

Eirgrid has said existing and planned facilities account for about 550 megawatts (MW) of power – already a significant cut of the country's total power grid supply.

And Eirgrid says it has facility enquiries on the table that would need another 1,000MW worth of power from 2019 onwards, and would require significant additional investment in the national grid. All those facilities, if built, would then account for some 20 per cent of Ireland’s power supply at peak capacity, nearly all going to benefit the data centres of large multinational companies.

That is potentially billions of euro needed for infrastructure investment, and huge private demand, on a national utility. from a single sector. The benefits seem grossly asymmetrical, given the smallish number of jobs that such centres provide at such societal cost.

Perhaps we have enough of them, at least until better and greener energy options are available, and data centres are required to utilise them.