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Data centres: Ireland moves to address electricity supply risk

Out-Law News | 10 Jun 2021 | 3:49 pm | 2 min. read

An Irish regulator has warned that “rolling blackouts” could result if steps are not taken to address the rapid rise in demand for electricity arising from growth in the country’s data centres sector.

The Commission for Regulation of Utilities (CRU) recognised the “benefits” that data centres bring to Ireland’s economy, but highlighted the “disproportionate impact” the growth in data centre electricity grid connections is having in comparison to other energy-intensive sectors.

Monaghan Garrett

Garrett Monaghan

Partner

This direction will likely require developers to give equal importance to its power supply strategy at an early stage

One forecasting model suggests that up to a third of all electricity demand in Ireland in 2030 could stem from data centres, however this figure does not account for all of the most recently received data centre applications seeking connection. If those connections were factored in, the electricity demand for data centres in Ireland would account for around 3.8GW. The current demand peak for the whole electricity system in Ireland is 5.5GW.

The CRU said that this necessitates “some form of intervention … at this stage to maintain the security of the electricity system”.

“The CRU is concerned that continuing to allow data centres to connect in accordance with current arrangements will significantly impact the ability of the electricity system to meet the reasonable demands of all consumers including data centres,” the regulator said.

“When the system cannot meet the demand required the system operators are required to take measures which can include load shedding whereby customers could be without power for periods of time. As a consequence, the CRU considers that it is necessary and proportionate to issue directions which promote and maintain the continuity, security and quality of supplies of electricity in the context of these issues whilst facilitating the continued connection of data centres to the greatest extent possible,” it said.

The CRU’s proposed directions would apply directly to the operators of Ireland’s electricity grid, EirGrid and ESBN, but they would also be likely to influence the power supply strategies developers and operators of data centres put in place, according to Dublin-based energy law expert Garrett Monaghan of Pinsent Masons, the law firm behind Out-Law.

Under the CRU’s proposals, EirGrid and ESBN would be required to prioritise grid connection applications from data centres in accordance with a series of factors, including whether data centres generate enough energy onsite themselves to support their demand for electricity, or can be flexible in reducing their consumption at times of system constraint.

The prioritisation regime would be applied on an Ireland-wide basis, under the CRU’s proposals. This could result in greater geographical spread of data centres in the country, according to Monaghan, who added that the CRU’s proposals would also have “significant ramifications” for the power sector in Ireland more broadly.

“In addition to facilitating data centre development away from the greater Dublin area, this direction will likely require developers to give equal importance to its power supply strategy at an early stage,” Monaghan said. “Given their constant base load requirements, siting data centre development closer to, or co-located, sources of power generation may also align well with Ireland’s offshore wind, biogas and hydrogen policies.”

“Although the direction is a proposal and may be amended following conclusion of the consultation, the CRU is clearly firming up its position on data centre demands and pre-empting the impact on Irish power and grid connection policy,” he said.

The CRU’s proposed direction is open to consultation until Wednesday 7 July.