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InvestigatesData CentresDATA CENTRE OPERATORS are beginning to look to emerging markets for their power-hungry installations as grid capacity issues, planning disputes and delayed policy are stalling plans to expand in Ireland.
These emerging markets, such as Spain, are attracting increased investment as governments are offering incentives such as tax exemptions and streamlined permit applications, while in Ireland new data centres are struggling to get regulatory approval.
Most of this is related to a de facto moratorium imposed by EirGrid to reduce the strain on the electricity grid, which means new data centre connections are dealt with on a case-by-case basis.
This has also meant some data centre proposals have been rejected by local council planning authorities, including Google’s expansion to its data centre campus in South Dublin. Planners rejected that application based on “the existing insufficient capacity in the electricity network”.
The Irish grid is under the most pressure in the EU from data centres, accounting for 18% of the national electricity consumption.
This is significantly higher than other European countries, a recent EU Commission report has found, with the Netherlands (5.2%) and Luxembourg (4.8%) the next two highest countries.
Last month, The Journal Investigates revealed how some data centres are turning to fossil fuels in order to circumvent these grid connection challenges, threatening Ireland’s ability to meet legally binding climate targets.
This includes building on-site power generation facilities, which will generate electricity from natural gas.
It’s unclear when sufficient grid capacity to lift the moratorium will be achieved. A spokesperson for EirGrid did not offer a timeline but said it “is currently awaiting further direction from the Commission for Regulation of Utilities (CRU) regarding new connections policy” of large energy users.
Earlier this year, the CRU announced a consultation with these large energy users, such as data centres, as part of a review of their connection to the electricity grid.
Its recommendations were expected to be published by now, but they have yet to be released.
A spokesperson for the CRU told The Journal Investigates the recommendations are expected to be published in “the coming period”, adding “it is important that all aspects of the decision are appropriately considered”.
Amid this lack of clarity and electricity grid constraints, some data centre operators are choosing to move to Spain, specifically the Aragon region in the north-east of the Iberian peninsula.
Nestled between the major Spanish economic hubs of Madrid and Barcelona, this region is quietly becoming the new promised land for data centres in Europe.
The head of the regional government, Jorge Azcón, said in October that Aragon could soon become “the Virginia of Europe, and even surpass it”, referencing the US state that hosts the largest data centre hub in the world and indicating the region’s ambition to attract more data centres.
Two major tech giants – Amazon and Microsoft – plan to invest in the region and Spanish authorities are committed to attracting new data centres by offering streamlined permits.
Some planned data centres in the region have been declared of “general interest” by the regional government, exempting developers from paying certain taxes and accelerating the processing of public permits to implement the projects, including the approval of environmental impact assessments
This approach differs from Ireland, where environmental groups often lodge planning objections to new data centres. When coupled with a backlog of cases at An Bórd Pleanála, this means projects can encounter long delays before being granted approval.
In the meantime, demand for data centres is relentless, with a surge in growth fuelled by the rise in artificial intelligence.
Both Amazon and Microsoft are among the many operators looking outside of Ireland.
In September, Ireland didn’t receive any of the €35 billion investment in data centres across Europe by Amazon, though it should be noted that the company already has a significant presence in Ireland, with around 30 data centres operational or planned.
A few months earlier in April, representatives from Microsoft and Digital Infrastructure Ireland – a representative group made up of ten data centre developers and operators – told Minister for the Environment, Eamon Ryan that if the CRU’s connection policy “puts a blanket ban on Dublin it will close Dublin for business and customers will go elsewhere”, according to documents released under Freedom of Information (FOI) to The Journal Investigates.
They added that they required “certainty now in order to continue investing in Ireland”.
Some argue that, from a climate perspective, these energy-demanding data centres would be better off staying in Ireland, pointing to Ireland’s temperate climate as a reason why data centres choose to set up here.
Ireland has one of the lowest needs for air conditioning to keep buildings cool across the EU, according to a recent Oireachtas report on data centres.
In hotter countries like Spain, data centres — which already generate incredible amounts of heat — need to be cooled substantially with water and air conditioning, adding to their environmental impact.
But Dr Paul Deane, a senior lecturer in clean energy at University College Cork told The Journal Investigates that “having [data centres] in other countries is not necessarily worse the environment, and in most cases it’s probably better.” This is because, Deane said:
Ireland has a very dirty power system, one of the dirtiest and polluting power systems in northwest Europe.
In truth, Deane added, the energy and climate aspect is just a small part of why a data centre chooses to set up in Ireland.
He said our democratic system, good workforce and “incredibly favourable tax climate towards large corporations” are far more compelling reasons to come here.
“Building a data centre in any other country in northwest Europe would produce less climate pollution than building it in Ireland,” he added, “so from my perspective, I don’t see it as being worse for the environment if data centres relocated somewhere else.”
In the last decade, Spain has become a European superpower in renewable energy, with the wind and solar farms in the Aragon region contributing significantly.
Over half of Spain’s electricity was generated from renewable energy in 2023, with wind farms replacing natural gas as the country’s main source of electricity.
The Aragon region alone contributed 13.5% of the total green energy produced, according to data from the Spanish national grid operator, Red Eléctrica.
By contrast, 44% of Ireland’s electricity supply came from natural gas in 2023, with wind generation providing 33%, according to a recent report from the Sustainable Energy Authority of Ireland.
As a result, while 2023 was a record year for renewables in our energy mix, “Ireland remains highly dependent on fossil fuels to satisfy our energy needs”, the report stated.
This renewable energy allows the energy-intensive data centres to operate in a far cleaner electricity grid compared to Ireland’s, but Spain’s hot climate means there is a different kind of environmental impact.
Cooling servers not only requires energy but also uses a lot of water. This is of particular concern in countries like Spain where drought has led to restrictions on water use in recent months.
At the start of this year, towns and cities in parts of Aragon implemented such restrictions after a prolonged period without rain.
The data centres in the region exacerbate the water scarcity by using drinking water from the urban water supply system.
Jesús Samperiz, a member of environmental NGO Ecologistas en Acción, told The Journal Investigates that it is “a joke” that data centres are allowed to consume huge amounts of water when the Aragon region has a water deficit.
Marina Otero Verzier, a Spanish professor and researcher on data centre architecture at Columbia University in New York, is also critical of the water use of data centres in Spain, saying there are other methods of cooling that reuse water to reduce the volume needed.
A spokesperson for Microsoft pointed to the company’s new data centre design that “consumes zero water for cooling”, but this has yet to be piloted and won’t be until 2026. Meanwhile, an Amazon spokesperson highlighted its sustainability efforts in the region, including an initiative with local partners to detect water leaks in old pipes
Neither company responded directly to questions about the concerns raised over the environmental impact of high water consumption in Spain or said how much water their data centres, either operational or planned, consume.
Last January, the Spanish government announced changes to the law, which would ensure data centres use “scarce resources such as water and energy” responsibly. But a change in the head of the ministry has put the new law on hold.
Sources close to the Spanish government told The Journal Investigates that the department is currently recalibrating its regulatory strategy and that, for the moment, a new law is not on the horizon in the short term.
A spokesperson for the Ministry of Digital Transformation did not respond to questions about what legislative changes are planned or when they will be implemented but said a strategy will be developed to “match the digital transition, the data economy, with the ecological transition and the responsible use of scarce resources such as water and energy”.
Part of the problem with data centres is that no matter where they are built, there will always be an environmental impact, according to Dr Fieke Jansen, a researcher on the environmental impact of expanding infrastructures at the University of Amsterdam.
Whether that’s through fossil fuels in Ireland or water use in Spain, there is no perfect place for data centres to be located.
Jansen said that even with renewable energy sources there are “embodied environmental costs associated with the mining, manufacturing, transport and disposal of hardware”.
As these data centres have become a critical part of the digital world, the question is not so much about whether we need data centres, UCC’s Deane said, but whether we can accommodate them here in Ireland.
On this, he said, “if they go somewhere else, the likelihood is that they will be using cleaner power” than here in Ireland, reducing our use of fossil fuels and helping us meet our legally binding climate commitments.
Reporters: Conor O’Carroll & Pablo Jiménez Arandia • Editor: Maria Delaney • Main Image Design: Lorcan O’Reilly • Social Media: Sadbh Cox
This investigation was developed with the support of Journalismfund Europe.
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When will people realise that the housing situation is policy?
Defund the NGOs.
Lacklustre? Housing budget is being boosted by €3,000,000,000 from sale of AIB shares going to Land Development Agency and to upgrade the water and energy infrastructure needed for housing, plus 6,400 new affordable and cost rental homes.
@Pat Hazzard: tip of the iceberg stuff when you consider the number of homes that we need to build
Worked all my life paid tax prsi and usc, now in receipt of contributory OAP .
Got the same €12 in the budget as someone who has never worked, never will and contributes nothing, where is the respect and maybe a little thanks?
The simple fact is anyone that can’t afford there own home are not going to vote fffg anyway so why try to buy them off now. Its to late to influence there vote. All we do in this country is pay taxes so fffg have enough money to buy votes. Simples.
have your say