Jennifer Whitmore (Wicklow, Social Democrats)
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4. To ask the Minister for Communications, Climate Action and Environment the analysis his Department has carried out to date regarding the use of energy by data centres, including their effect on energy prices and the impact their energy demand will have on Ireland’s capacity to reach renewable energy targets; and if he will make a statement on the matter. [44120/21]

Jennifer Whitmore (Wicklow, Social Democrats)
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I would like to ask the Minister what analysis his Department has carried out to date on the use of energy by data centres, including their effect on energy prices and the impact their energy demand will have on Ireland's capacity to reach our renewable energy targets.

Eamon Ryan (Dublin Bay South, Green Party)
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The Government Statement on the Role of Data Centres in Ireland's Enterprise Strategy 2018 acknowledged the role of data centres as part of the digital and communications infrastructure for many sectors of our economy. The statement also noted that data centres pose considerable challenges to the future planning and operation of Ireland’s power system.

In 2020, data centres accounted for approximately 11% of the total electricity used in Ireland, demonstrating that the impact of data centres on Ireland’s energy demand and the related electricity emissions is significant. EirGrid, in its Generation Capacity Statement 2020-2029, project that demand from data centres could account for 27% of all demand by 2029.

Electricity and gas retail markets in Ireland operate within a European regulatory regime, wherein these markets are commercial, liberalised and competitive.  The Commission for Regulation of Utilities, CRU, is responsible for ensuring all electricity customers and network users receive value for money within a transparent, fair and equitable charging regime. The costs of renewables are supported by the public service obligation, PSO, levy which is charged to all electricity final customers in Ireland, including large energy users.

Operating within the overall EU framework, responsibility for the regulation of these matters is solely a matter for the CRU. In June 2021, the CRU published a proposed direction to the electricity system operators related to data centre grid connection for consultation. This included a number of options for managing data centre connection demand.

Earlier this year, EirGrid carried out a public consultation entitled Shaping our Electricity Future. The aim is to make the electricity grid stronger and more flexible so that it can carry significantly more renewable generation as well as meet increasing demand from high-volume energy users such as data centres. This may include potential geographic restrictions or incentives of large demand customers closer to the generation of power, potentially giving a more regional balance of data centres.

Jennifer Whitmore (Wicklow, Social Democrats)
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The Minister referenced the Department of Business, Enterprise and Innovation's 2018 strategy. My fear is we have two arms of Government that are pulling against each other when it comes to this policy. We have the Department of Enterprise, Trade and Employment that is promoting data centres from an economic perspective, despite the fact it does not collect any information on the number of jobs created by these data centres, and the Minister's Department, which obviously has obligations, as does the entire Government, to meet our climate and renewable energy targets.

The Minister has talked about changes that may happen and how geographical changes may be required and conditions put on data centres. The reality is that 30% of our electricity use will be data centres. It could potentially be 50% if the current applications are approved. These data centres are applying for permissions now, they will be conditioned now and there will be no retrospective ability to change their location or the conditions that are placed on them. Therefore, the risk is those data centres will impede our ability to meet our targets by 2030. Would the Minister agree with a moratorium on data centres until there is specific analysis done on that to show the exact impact?

Eamon Ryan (Dublin Bay South, Green Party)
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There is no division in Government in policy terms on this issue. We all agree that meeting our climate targets has primacy. Every sector and industry is going to have to contribute to that. At the same time, as Deputy O'Rourke said in the previous question, we need economic and social balance. The digital industries we have in this country play a huge part in providing us with the finance to be able to achieve many of the social objectives we have. We all use mobile phones daily and everything goes through data centres.

As I have said in respect of the policy work being done in the CRU and EirGrid, we have the means to manage this, through both the planning and grid connection systems, and to set conditions so that we bring in data centres but they contribute to our electricity security and decarbonisation plans and do not hinder them. That is clear. First and foremost, the policy objective is the decarbonisation plan. These companies understand that. They are international operators who have committed themselves to decarbonisation strategies. When we are saying that, it is not going against what international investors or others would expect in a modern country.

The question is how we balance that huge balancing system. The EirGrid study from March this year, Shaping our Electricity Future, was asking the right questions. Do we bring the usage to where the power is? How do we manage the grid? The grid is central and key in this. The CRU is asking if the data centres can be flexible within a system and if they can have their own backup power we can use to help give us stability. Can we take the waste heat and use it to meet some of our climate targets?

Climate comes first. Digital industries and others have to fit in within decarbonisation plans. We are good at balancing renewable powers in this country. We are probably the leading country in the world in that respect. EirGrid has more expertise than any other transmission system operator, TSO, so we can and will be good at this. The data centres fit into climate, not vice versa.

Jennifer Whitmore (Wicklow, Social Democrats)
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I must respectfully disagree with the Minister. Climate is not coming first in this regard. While it is positive the CRU and other agencies are looking at the issue, coming up with questions and looking at potential solutions such as the geographical distribution or conditions being placed on data centres, they are not there yet. In the absence of those rules being determined and put in place, the data centres are applying for planning permission and getting the planning permission. They will be entitled to operate under the planning permission they receive. Therefore, we will have a disparity. We will have a significant number of data centres that will be drawing off our electricity and renewable electricity resources and the systems are not in place. I understand there is a commitment in the programme for Government to bring in efficiency standards for data centres. I am wondering where they are up to and what the progress is on that.

The main question is, how many data centres is enough? At what stage do we say we have met our responsibilities from a data perspective? We will have potentially 50% of our electricity being used by data centres compared with 3% across Europe. Do we as a country have to take on Europe's responsibility here too?

Eamon Ryan (Dublin Bay South, Green Party)
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I do not believe we will have 50% of our power going to data centres. I do not believe the attention going to this one issue, and it is one we have to manage, is reflecting the real challenge.

One of the challenges at present is that we need new backup generation to help manage not just data centres but also our use of electricity for transport, heat and a range of different areas. We have 2 GW of old conventional plant that we need to switch off in the next five years. We need to replace this with balancing capability plant that will help us run this renewable-dominated system. That is one of the biggest and most immediate challenges. There are also other demand issues. How do we power our fleet of electric vehicles, EVs? That is more of a grid management issue on the distribution side but balancing that is also a significant issue, as are district heating and a range of other demand issues. The data centre sector is one which must be fitted in but it is a complex problem and challenge. The biggest immediate issue is the question of how to get flexible backup generation not only to power data centres but to manage and power the whole system. The question of data centres will be easier to manage than that issue in the coming years.