What’s the future for Ireland’s data centres?

Ireland has long been a global hub for data centres, which process, store and distribute huge volumes of digital information at speed. Ideally located between North America and Europe, with a climate that is neither too hot nor too cold for this power-intensive industry, Ireland also offers regulatory stability and a low-tax environment for many of the big tech firms that set up here.

Data centres, which are the evolution of Ireland’s once world-leading floppy disk and CD-ROM export industries, have contributed massively to Ireland’s strong economic activity, attracting foreign direct investment (FDI) and creating thousands of jobs.

Today, there are 82 data centres in Ireland, mostly located in or around Dublin. But now one of Ireland’s biggest industries is coming under fire, not least because of its high-power demands and mounting concerns about grid capacity, sustainability and climate targets.

In 2022, transmission challenges saw state-owned grid operator EirGrid impose a de facto moratorium on data centre development in Ireland. It will not consider new load requests until 2028. Until then, data centre clients are turning their backs on Ireland and FDI is ending up elsewhere.

Investing in sustainable energy solutions

Gary Watson, Country Manager at Keppel Data Centres, has been in the industry for more than 30 years. He says a reality check is needed. While it is true that Ireland’s data centres account for around 6 terawatt hours (21 per cent) of Ireland’s total electricity demand, they make up just 2.5 per cent of total greenhouse gas emissions. Other sectors in the Irish economy, including transport and farming, are responsible for a much larger share of emissions.

“As developers and operators, we’re making huge efforts to cut consumption and improve the industry’s green credentials,” says Gary. In fact, in May 2024, Keppel became the first colocation data-centre provider in Ireland to sign long-term power purchase agreements (PPAs) for energy generated by two solar farms and one wind farm. A fourth PPA is on the cards.

It is also pushing ahead with installation of a battery energy storage system (BESS) at two data centres in City West to capture excess renewable energy production. In times of stress, the BESS will provide flexible capacity to the grid, benefitting all energy consumers in Ireland.

Simmons & Simmons partner Barry Gross acknowledges efforts being made by data centres but says “the world’s not hearing it.” He wonders if a UK-style affordable-housing approach could work for data centres. “Just as residential developments require an allocation of affordable housing, data centres could be obliged to fund, say, additive grid capacity beyond their own demand capacity,” he explains. “The issue is not a lack of capital or willingness on the part of the data centre operators; rather it’s the need for innovation in policy and governmental backing.”

Why Ireland is missing out on investment

Bringing more than 30 years’ experience in FDI, Garry Connolly is the founder of Host in Ireland, a strategic global initiative to raise awareness of the benefits of hosting digital assets in Ireland. “We need to take big bold leaps, not little steps, to get back in the game,” he warns, “because this is a trillion-dollar industry. Opportunities are being lost because there isn’t enough certainty in Ireland.”

Instead, investment is going into other economies, where conditions are more favourable. He cites Apple, which planned to build a €850m data centre in Athenry, Ireland in 2015. Numerous delays and legal challenges saw the project scrapped in 2018, with Apple investing in data centre development in other jurisdictions instead. “The FDI decision makers, who were prepared to take a risk, walked away.”

But the world moves on, and data centre investment is happening, just not in Ireland. And now the numbers are even bigger: €200bn in France announced in March 2025, and €100bn in Germany last year.

The grid operator’s de facto moratorium makes Garry question why more can’t be done to meet rising energy demand. More energy availability means greater FDI into Ireland, which boosts employment prospects and the economy.

He says: “It’s easy to blame the data centres for grid shortages but Ireland offers huge potential for renewables. We’re surrounded by sea, yet our first and last investment in offshore wind — the first-ever in Europe — was more than 23 years ago. Belgium, with its 69-kilometer coastline, has 1,342 per cent more wind farms than we do.”

Future planning

The battle is not lost.

Barry Gross sees necessary opportunities for Ireland in artificial intelligence (AI) inference data centres. Unlike AI training centres, which require immense computational power over long durations, inference data centres focus on low latency. They are much smaller deployments, which means lower overall power consumption.

Used for applications like autonomous vehicles, voice assistants, fraud detection and personalised recommendations, inference data centres are deployed close to users to reduce response times. As the use of AI becomes ubiquitous across critical sectors of the economy, Ireland must be able to provide the inference capabilities that those business demand. If not, it won’t just be the data centres that move away from Ireland.

“Businesses, as they become more dependent on AI, will want quick and easy access to it,” says Barry. “This is a fantastic opportunity for an enterprise-based economy like Ireland, with its ready-made talent and know-how, to position itself strategically to attract investment. This time, we can’t afford to lose out.”