Ms Marie Donnelly:

I thank the Joint Committee on Environment and Climate Action for the opportunity to attend today and to speak on the impact of future licences and contracts to connect data centres to the gas network. I am the chairperson of the Climate Change Advisory Council. The council's role is to be an independent advisory body tasked with assessing and advising on how Ireland can achieve the transition to a climate-resilient, biodiversity-rich, environmentally sustainable and climate-neutral economy. The council particularly welcomes the opportunity to have a discussion on the growth in energy demand from data centres in the context of decarbonisation of the electricity sector.

The electricity sector was set one of the most ambitious emissions reduction targets in terms of its sectoral emissions ceiling, SEC. However, it is the sector that is furthest off track in terms of meeting this ceiling, with already 49% of its emissions target consumed after only two years. EirGrid has estimated that a 34% increase in demand for electricity is foreseen by 2030, with the largest growth coming from data centres, which are projected to account for 23% of electricity demand by 2030. Over the same time period, the 2023 national climate action plan targets the roll-out of 9 GW of onshore wind, 8 GW of solar and at least 5 GW of offshore wind by 2030. This additional renewable electricity which uses our own indigenous resource will generate sufficient renewable electricity to meet the forecasted growth in electricity demand. However, the council notes the deployment of onshore renewables is not on track and the current connection rates observed for both onshore wind and solar are significantly lower than required to meet our 2025 and 2030 targets. The council is particularly concerned that delays to key actions are jeopardising the achievement of our onshore renewable electricity generation targets. In particular, we are concerned that the renewable electricity spatial policy framework that was due to be published in quarter 3 of 2023 and which is crucial to provide the necessary spatial planning guidance to support the scaled up deployment of onshore renewable electricity has not been published.

Earlier today, the Government published a report on the achievements of quarter 3 actions under the climate action plan. It has acknowledged that these are not on time but has given no indication as to when they will come through. This is rather unfortunate.

Second, enabling actions on hybrid technology grid connections, policy on private wires and the new draft wind energy guidelines for onshore wind energy generation have not been finalised. Further, the council has concerns about the near absence of onshore wind projects that have received planning approval in the past 12 to 18 months. For example, just four onshore wind projects, totalling nearly 70 MW, have been approved in the planning system in the past 12 months, with one of these projects currently being under appeal. Just so that members of the committee are aware, there are applications for approximately 800 MW currently in the planning system. There is no indication as to when decisions may or may not be taken on these.

This failure to get planning approval means that there are important consequences. First, it means our capacity to meet growing electricity demand is jeopardised. Second, the availability of projects for data centres to contract with for corporate power purchase agreements is diminished. Third, a reduction of projects with planning approval will lead to a reduced number of qualifying projects for the renewable energy support scheme, RESS, 4 auction in 2024 and a likely increase in the average price that consumers will have to pay for electricity in the future.

The council has previously stated that accelerated deployment of onshore renewable electricity generation will be crucial for the electricity sector to meet its sectoral emissions ceiling for the first carbon budget period and indeed for the second carbon budget. The delay to the expansion of our onshore renewable capacity in line with our 2023 climate action targets, along with the continued use of coal in electricity generation, means that steeper emissions reductions will be required in future to remain within our carbon budgets.

Specifically on data centres, the council has recommended that planning permission for all data centres should require corporate power purchase agreements for renewable electricity, the volume of which exceeds the maximum electricity demand of the data centre, and that these should be connected to the grid in advance of commissioning the data centre. This is in line with the principle of renewables additionality set out in the Government's statement on the role of data centres in Ireland’s enterprise strategy. Also, new data centres and other large energy users should be required to build in heat export ability at the time of initial construction for simple potential connection to future district heating networks.

The council has considered the Government’s statement on the role of data centres in Ireland’s enterprise strategy, in which the Government has stated that islanded data centre developments that are not connected to the electricity grid and are powered mainly by on-site fossil fuel generation would not be in line with national policy. These would run counter to emissions reduction objectives and would not serve the wider efficiency and decarbonisation of our energy system. Growth in islanded data centres could result in the risk regarding security of supply being transferred from electricity to gas supply, which would be a significant challenge in light of Ireland’s reliance on gas importation. In this respect, the council recommends that, under section 10A of the Gas Act, and to reflect the Government's statement, the CRU should direct GNI not to sign any more contracts to connect data centres to the gas network where the data centre would be powered mainly by on-site fossil fuel generation. If there is a legislative barrier, the Government should take immediate action to revise the Gas Act in line with national policy and the principles set out in the Government's statement. Further, each system operator should work with large energy users to facilitate accurate hourly emissions reporting and grid carbon intensity transparency and allow data centres to optimise computing loads in order to maximise the use of renewables and minimise carbon emissions.

The objectives of all relevant public bodies should be immediately aligned with and support the achievement of the national climate objective. The Government should review and revise the legal mandate of relevant State agencies and public bodies to ensure that these are consistent with delivering climate action plan measures, as well as the legislated carbon budgets.

In order to meet the requirement to have on-site generation and-or battery storage that is sufficient to meet their own demand, data centres are utilising on-site dispatchable fossil fuel generation, rather than renewable electricity stored in batteries. Battery storage using renewable electricity is key to decarbonising data centres and maximising the available renewables in the system. However, the current regulatory treatment of battery storage represents a barrier to the entry and participation of battery storage in the wholesale electricity market. The council is concerned that the delay to the publication by the Department of Environment, Climate and Communications of the policy framework for electricity storage, which was also due in the third quarter of this year, will have a knock-on delay to the publication of the regulatory review of the treatment of storage including licensing, charging and market incentives, which is scheduled for the fourth quarter.

When renewable electricity is not available, it would constrain emissions and be economically more desirable if the backup was provided centrally with a large open-cycle gas turbine. Backup provision through diesel generation should be strongly discouraged.

Our indigenous renewable resource is sufficient to meet the forecast growth in electricity demand, but roadblocks must be removed to accelerate the necessary scaled-up roll-out of renewable electricity across the country, recognising renewable energy projects as an overriding public interest. We are now in the third year of the first carbon budget. We need to urgently address the delays to the roll-out of onshore renewables if we are to stay within our carbon budget and meet an increasing demand for electricity. The council views the recent growth in the number of islanded data centres as of particular concern due to their potential to increase gas demand, jeopardise gas security and give rise to an associated increase in carbon emissions.

The council is happy to assist this committee in its deliberations on the decarbonisation of our electricity sector in the context of growth in energy demand. I look forward to the discussion.