Electricity grid warnings ‘causing disquiet’ among multinationals, says IDA

Warnings that electricity demand was pushing supplies to their limit sparked concern among multinationals in the Republic, IDA Ireland has told regulators.

Electricity market regulators last winter issued several “amber alerts”, warning that demand in the Dublin area was close to capacity, increasing the risk of power cuts should the network run into problems.

IDA Ireland says the amber alerts “are causing disquiet in the foreign direct investment community”, in a submission to the Commission for the Regulation of Utilities (CRU).

The State agency responsible for luring overseas companies that employ 257,000 workers in Republic, highlights the disquiet in its response to the commission’s consultation on data centres.

It points out that multinational investors regard the electricity system’s stability as one of the Republic’s traditional strengths.

The agency stresses that supply challenges must be resolved as soon as possible to meet the needs of an expanding economy.

However, the IDA submission argues that any move to temporarily halt connecting data centres to the national grid would cause the State “considerable reputational damage” and hit the wider hi-tech sector.

Data centres

Among other proposals, the CRU suggested imposing a moratorium on grid connections for data centres, whose growth is partly blamed for increasing electricity demand, particularly close to Dublin.

The IDA also has serious doubts about the CRU’s most favoured option, that data centres with their own independent electricity generators, get priority for grid connection in the future.

The development agency argues that this would require data centres to spend money building unsustainable fossil fuel-powered generators.

IDA clients have a clear preference that the market supply their electricity from increasingly sustainable sources, the submission says.

It notes that data centres favour purchase agreements with individual wind- and solar-powered electricity generators.

The agency maintains that the CRU and national electricity grid operator, Eirgrid, should instead prioritise centres with these deals for connection.

Eirgrid has agreed to connect data centres, likely to require 1,800 mega watts (MW) of electricity in total, to the grid, while it has applications from similar businesses seeking a further 2,000MW.

The grid operator told the CRU in June that growing demand from data centres, which can consume as much power as a large town, threatened security of electricity supplies in the Republic.

The statement prompted the CRU to begin the consultation, which set out various options for future data centre connections, including that Eirgrid prioritise connection applications from centres outside Dublin.

Last winter’s amber alerts were partly due to the fact that two gas-fired electricity stations were out of action. One of them, an Energia-owned facility in Huntstown, Dublin, will resume generating in October.

IDA Ireland argues that data centres are just one source of demand, accounting for 11 per cent of overall electricity consumption.

The agency says it is concerned that the CRU’s consultation wants these electricity customers to alter their approach to investing in the Republic to “meet shortfalls on the supply side”.

Economic boost

Its submission points out that data centres are part of a technology industry that employs 140,000 people in the Republic and generates about €52 billion each year.

IDA Ireland adds that technology businesses with data centres in the Republic employ 20,000 people, while their spending, taxes and investment contribute substantially to the economy.

A recent report shows that Amazon Web Services supported 8,700 jobs here between 2011 and 2020. Last year, the company spent €228 million hiring Irish subcontractors to work on its data centres outside the Republic.

The multinational recruited these businesses as they had gained experience working on the company’s Irish facilities.