Daniel Murray’s ESG newsletter: Conundrum over data centres sparks row
The Business Post’s ESG newsletter is your source for the news that matters in environmental, social and governance, all told from an Irish perspective
The divisive debate about data centres’ environmental impact versus their economic importance rolled on last week.
I revealed in Sunday’s paper that data centre developers are seeking connections to the gas grid which could use three times as much power as all existing facilities in Ireland.
Connecting to the gas grid is not the same thing as connecting to the electricity grid, and from an environmental perspective, it is potentially much worse, as the electricity grid is powered by 40 per cent renewables.
But due to the moratorium on new electricity grid connections in Dublin, developers are increasingly seeking to build their own gas fired power plants and get direct connections to the gas grid.
Currently, there are around 82 data centres with a maximum power capacity of 1.2 gigawatts (GWs) connected to the electricity grid, the vast majority of which are in Dublin.
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But the volume of data centre gas power demand looking to connect directly to the gas grid is the equivalent of about 3GWs, which is nearly triple the volume of existing developments, and almost the same power capacity as all the gas power generators currently in operation in Ireland.
If all of these data centre gas were to be built, and were to run full time, emissions from them would be equivalent to 10 million tonnes a year, which is more than the total emissions of the entire electricity sector currently.
However, we can also presume that not all connection requests would come to fruition, and that some data centre operators would argue their gas power would only be used intermittently as backup, if they manage to get an electricity connection.
Nevertheless, the moratorium on electricity connections in the Dublin area until at least 2028 means many of these proposed data centres would be “islanded”, meaning they would have to run solely off their gas power stations.
It is this issue that is at the heart of a coalition row between Simon Coveney, the minister for enterprise, and Eamon Ryan, the minister for environment.
Coveney is in favour of allowing data centres to connect to the gas grid, while Ryan has highlighted how such a policy would damage Ireland’s climate targets.
But with the industry mostly unwilling to located outside of Dublin, it industry has little choice in the interim but to try for approval based on having their own gas power.
Coveney is in favour of data centres being allowed to connect to the gas grid, so that they can build their gas power, under the argument that in time they will be used less.
But if they are used for any substantial period of time, they could blow Ireland’s carbon targets in the electricity sector, which is the one sector on course to actually reduce emission substantially by the end of the decade.
It is a conundrum, as Ireland risks sacrificing its credentials as a desirable location for this thriving industry and the powerful companies that operate within it.
Ultimately, the decision will be for the Commission for Regulation of Utilities (CRU), which has launched a consultation on its policy around connecting large energy users to the gas grid.
The results of that consultation will be eagerly awaited by the industry and environmental scientists alike.
Thanks for reading,
Daniel Murray
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Third annual PwC Business Post Sustainable Business Awards
The PwC Business Post Sustainable Business Awards has been confirmed for its third annual edition on the 21st of March 2024, recognising leadership, innovation, investment and ingenuity in the areas of Environment, Social and Governance ( ESG ).
Past winners of the awards include An Post, Bus Eireann, Bord na Mona and University College Cork.
We are very pleased to note the growing momentum of our Sustainable Business Awards Showcase events, which highlight the best practice found at winning organisations, and provide a network and inspiration to those seeking to become our next award winners.
David McGee, PwC Ireland ESG Leader, said the awards “celebrate best in class Irish businesses across a wide range of ESG categories that invest in and promote sustainable practices, innovation and leadership. The categories, entry process and deadlines can be found at www.sustainablebusinessawards.ie
For further information contact Chris Flood at the Business Post: cflood@businesspost.ie
