Republic of Ireland: Ireland's low tax advantage boosts data center construction

Aug 02, 2023 | Posted by MadalineDunn

Despite repeated calls from different parties in Ireland to halt data center building, a recent report has shown that Ireland's low tax advantage is  stimulating further growth in data center construction. 

According to a recent market review, Ireland's corporation tax rate, being one of the lowest in the EU at 12.5%, is a "significant advantage" for data center construction and expansion in the region. Specifically, the report highlighted that Dublin dominated the data center market, accounting for over 90% of the existing rack capacity. Of course, it's not just the low tax rate that's a draw (although it's a key factor), it's geographical location is central, it has a strong data protection regime, and a cool climate. 

While some voices have dubbed concerns a "moral panic," claiming that the country doesn't need fewer data centers, just more electricity, the data reveals ballooning growth in recent years. Data centers in the Republic of Ireland account for nearly a fifth of all electricity, and the amount that they use has risen by 400% since 2015.  EirGrid estimates are that by 2030, data center electricity consumption could increase to 30%, up from 18%. 

Further, there has been an increasing wave of amber alerts experienced by the electricity grid as of late. For example, between 2010-2019, there were just 13, while in 2022,  alone, there were eight. 

However, data centers are not just putting strain on the grid, they're also reportedly contributing to increased electricity prices, and, worst of all, they're complicating climate efforts. In fact, the government's own climate advisors have said that there needs to be a plan to deal with the number of facilities being drawn up. Ireland should have submitted its 2050 carbon neutral plan to Europe three years ago, but despite the extra time allotted, the current long-term strategy, which reportedly remains "incomplete" fails to "adequately address" data centers as a primary driver of energy demand. 

​​In a letter to Environment Minister Eamon Ryan, responsible for finalizing the country's 'Long-term Strategy on Greenhouse Gas Emissions Reductions,' the author said: "Whilst these offer opportunity to Ireland our LTS should reflect in more detail on how this development can be delivered in a sustainable manner that is supportive of our national climate objective, our vision for 2050, and is consistent with the achievement of our sectoral emissions ceilings."

That's not to say that data centers are not becoming more sustainable. As Marc Garner, SVP secure power Europe, Schneider Electric, notes, the average annual power usage effectiveness (PUE) has improved from 2.5 in 2007 to 1.55 in 2022.  However, there is much more to be done, and right now, data centers' electricity usage in Ireland is increasing, and showing no signs of abating, while the country is on track to fall well short of its climate targets.