Introduction
At present, Ireland’s data centres account for 21% of Ireland total electricity consumption (CSO, 2024). This presents a challenge for Ireland as its grid data centres are consuming a massive amount of the Island’s power and water. It is expected that these data centres will consume a third of the Island’s electricity by 2026 with concerns there could be rolling blackouts, which has left a pause on building any new data centres in Dublin and Greater Dublin until 2028.
This has been frustrating for those who see Ireland’s role as a leading tech hub, which is economically important for the country. It also leaves policymakers with a difficult challenge to face, is it possible for Ireland to maintain its status as Europe’s technology hub, while also meeting its energy needs, let alone its climate commitments?
Economic Background
Ireland’s own economic miracle has become well documented, in the early 90s Ireland introduced the 12.5% corporation tax on trading income which was then locked in the early 2000’s. This was not controversial at the time and was seen as a massive gamble, as 12.5% corporation tax was lower than others in other OECD developed countries. However, it should be noted that this 12.5% corporation tax rate has now transitioned to 15% under the OECD Pillar Two Framework, and that Research and Development (R&D) rose from 30% to 35% in 2024 (Irish Government, 2023).
That tax cut, along with a suite of generous incentives, caught the attention of different multinationals companies, then followed the tech giants, finance firms, all wanting to create a foothold in Ireland. With this came well-paying jobs and wealth, with Dublin Docklands becoming known as the “Silicon Docks”. Sixteen of the world’s twenty largest tech firm’s European operations headquarters or data infrastructure are now based in Ireland. These include Apple, Google, Microsoft, Meta, Amazon Web Services, and Intel (IDA Ireland, 2025). The ICT sector now contributes 18% of Irelands gross value added (GVA) and employs over 106,000 people which is about 4% of the national workforce (European Commission, 2024).
As a whole, economically, the data centres sector within Ireland remains a high contributor. It is estimated that data centre operations have added €7.3 billion to the Irish economy, while AI adoption could account for €250–310 billion in additional GDP by 2035, depending on supportive policy design (Trinity School of Business, 2025).
Energy Demands and Infrastructure Stress
However, this rapid growth has come with its own challenges and the digital infrastructure required has changed Ireland’s energy landscape. The Central Statistics Office noted that “The percentage of total metered electricity consumption accounted for by data centres rose from 5% in 2015 to 21% in 2023. In 2023, urban households used 18% of total metered electricity consumption and rural households used 10%” (CSO, 2024). To add to this, it is predicted that the share of data centres in electricity consumption could increase from an already massive 21% in 2023 to 32% in 2026 (Carbon Brief, 2025).
With such growth, it is clear that data centres are placing new pressures on Ireland’s own electricity infrastructure, creating a supply and demand scenario which could have an impact upon the national grid. It is worth noting that this is not just an Irish problem, but an EU wide problem. For example in “Denmark, electricity use by data centres could increase sixfold by 2030” (Brugel, 2025). EirGrid, Ireland’s system operator has noted its concerns in relation to its existing infrastructure problems and ability to manage such a surge for demand, particularly within the Dublin region where most data centres are connected.
The Grid’s constraints have further been placed under pressure due to the timing and nature of data centre development which has been outpacing the ongoing work on constructing new generation capacity and grid reinforcement projects. During periods of high demand, particularly within the winter period, the risk of possible supply shortfalls has increased, promoting EirGrid to implement a demand-side management measure. Within EirGrid’s Winter Outlook for 2025/26 they made it very clear there would not be any risk of a widespread blackout this winter (EirGrid, 2025). However, the Outlook did note that the system “could at times enter the “alert state”, where demand means the amount of electricity generation held in reserve is at low levels” (Irish Times, 2025).
Carbon Budgets
Unchecked data centre growth poses direct threats to Ireland’s legally binding carbon budgets. The projected data centre expansion could lead Ireland to exceed its second carbon budget target for the 2026–2030 period of 200 million tonnes of MtCO₂eq, while data centres will generate approximately 30% of the national electricity demand by 2030 (SEAI, 2025). The Environmental Protection Agency (EPA) has recently conducted an analysis, which shows Ireland will surpass its 2026–2030 carbon budget by 77 to 114 million tonnes according to current projections (EPA, 2025).
It should be noted that the carbon calculation presented depends on the grid carbon intensity. The construction of new renewable power plants to fulfil data centre demand will result in zero marginal emissions. However, their carbon footprint could increase because delayed renewable energy deployment, diesel backup systems, and fossil fuel import operations need to be implemented to fulfil the growing demand as outlined above.
Future Pathways
In December 2025, the Irish Commission for Regulation Utilities (CRU) established a connection policy for data centres, which explores and works towards data centres obtaining 80% of their power from new renewable energy sources, while at the same time they must either install dispatchable generation or storage facilities at their sites (RTE, 2025).
Within the renewable energy requirement, the CRU notes this could be achieved through mechanisms like the Corporate Power Purchasing Agreements (CPPAs), such as with wind or solar developers. This would offer a six-year “glide path” from the data of energisation to meet this set target. On top of this, new data centres will be required to provide on-site or proximate to the dispatchable generation or its storage capacity which matches its import capacity (this is subject to derating). In doing so, the aim here is to have generation capable of participating in the wholesale electricity market and to also allow power back to the national grid as and when is needed.
As part of this and the Governments Climate Action Plan and the associated National Retrofit Plan, it is anticipated that increased grid infrastructure will enable the connection of 250,000 new homes and 680,000 heat pumps for homes and businesses by the end of 2030 (Business Post, 2025). This infrastructure can support the electrification of public transport and almost 1 million charging ports for electric vehicles (Business Post, 2025). Furthermore, this infrastructure expansion is directly targeted at meeting the significant level of expected electricity demand growth due to growing population and industry.
Another avenue for exploration is integrating heat and power from data centres, as they do have the potential to serve as components to support the transition toward a lower carbon emission economy. District heating networks already have some operators who extract waste heat for their operations according to South Dublin County Council (2024). The Dublin project will provide 133 affordable apartments through 2026 before it expands to heat between 3,500 and 5,000 homes during the following five years (South Dublin County Council, 2024). The initiatives show how digital infrastructure can shift from being a grid burden to enable energy efficiency and circular economy practices.
Horizon Scanning
It is clear that data centres, not just in Ireland, but across Europe will have to be more dynamic in how they approach climate and energy concerns. Companies will now have to face these issues because it has been mandated within the Corporate Sustainability Due Diligence Directive (CSDDD) which requires all large companies to prevent any human rights and environmental harm in their value chains.
Another layer to this is under the revised Energy Efficiency Directive, which highlights that the core requirement for data centres is to report what they are doing in terms of energy performance using a standardised set of technical indicators rather than ad hoc metrics. In practice, the EU Framework leans heavily, though not explicitly, on the metrics defined in the ISO 30134 series (Future Tech, 2024). That includes PUE (Power Usage Effectiveness), ERF (Energy Reuse Factor), and REF (Renewable Energy Factor), all of which capture how much of a facility’s electricity is sourced from renewables.
For Ireland, data centres and their impact on its energy landscape is an immediate and pressing issues for policymakers, regulators and decision makers. How this challenge is framed now will shape the range of policy levers and innovation on offer and what Ireland’s ambitions should be. The intersection of data centres, climate, and energy should be looked upon as a competitiveness opportunity for Ireland. It remains possible for Ireland to retain its position as a leading data centre hub while also meeting its climate commitments, provided that policy, regulation, and investment are aligned with this dual objective.