Amazon Pushes For Data Centre Expansion Despite Energy Concerns

Ireland has become a focal point for Europe’s soaring hyperscale data centre market and the latest plans from online behemoth Amazon are a sign that demand is not set to reduce any time soon.

But with warnings that Ireland’s energy infrastructure is struggling to keep up with the energy demands from data centres, there are increasing concerns about the viability of a sector that is already outstripping Ireland’s rural buildings for power consumption. 

The latest proposal to expand services came in January 2023, when online retail giant Amazon lodged plans with Fingal County Council for three new data centres for its data centre campus to the north of Mulhuddart, North Dublin, via Universal Developers.

The three new data centre buildings, with a combined power load of 73 megawatts, will add to the Amazon Web Services data centre campus on a 65-acre site at Cruiserath Road, Dublin 15. Planning consultant John Spain Associates said that one data centre is already operational at the campus, while construction work is continuing on two others.

A final decision will be made during February on the proposed expansion, and an Environmental Impact Statement lodged with the scheme stated that permitted development and future indicative development at the data campus will consume 220MW in power and produce over 607,000 tonnes of CO2 annually.

If approved, the plans would be latest boost to Ireland’s data centre real estate sector and, in a major report published in 2022, market researcher Arizton said that the adoption of cloud-based services and social media use are key factors driving the hyperscale data centre market and that Ireland is expected to be the fastest-growing of the hyperscale data centre markets in Western Europe over the next six years.

The report on Europe’s hyperscale data centre market predicted Ireland would achieve an annual growth forecast of 5.76% over the period 2022 to 2027, with the next-fastest-growing countries in Western Europe the UK and Germany.

Ireland Becomes Data Centre Hub

Indeed, Ireland has increasingly become a location for data centre investment in recent years. In 2020, TikTok joined tech giants such as Google, AWS and Microsoft in choosing the country as a data hub. TikTok expects its Irish data centre at the Echelon campus in the Clondalkin area of Dublin to go live this year, after a series of delays. 

However, despite the economic benefits of a growing hyperscale market, data centres have become a contentious topic because of their environmental impact and the toll they may take on the country’s energy supply and the strain they can cause on the grid.

In response to Amazon’s latest application, concerns were also raised regarding an over-concentration of data centres in the Dublin area impacting the electricity grid. The most recent figures released by the Central Statistics Office showed the percentage of Ireland’s electricity used by data centres rose to 14% in 2021, more than the electricity consumed by Ireland’s entire rural residential dwellings, which stood at 12%.

And that figure is only rising, with EirGrid predicting that data centres could account for a quarter of the country’s electricity usage by 2030 as the country continues to attract more data centre developments.

The issue came to a head in January 2022, when the state-owned grid operator said it would not connect new data centres in Dublin “for the foreseeable future” because of constraint concerns, and it added that data centre applications would only be considered for other parts of the country on a case-by-case basis.

Last year, South Dublin County Council voted to ban any further data centre developments from 2022 to 2028, citing a lack of capacity in the region. This decision was challenged in a High Court case by Irish-owned Echelon, which received €855M in funding in 2021 to complete four data centres in Ireland.

However, the Office of the Planning Regulator ordered a reversal of the ban anyway, saying it did not align with national policy.

And the government has confirmed that new data centre developments will not be banned in Ireland.

However, it published guidelines for new developments, which included a preference for data centres that can demonstrate “a clear pathway to decarbonise and ultimately provide net-zero data services”,  make efficient use of the energy grid and demonstrate the “additionality of their renewable energy use in Ireland”.

AWS Pledges To Renewables

To that end, Amazon Web Services has said that it already directly invested €4.4B in Ireland between 2011 and 2020 and supports 8,700 jobs in the country, with 400 construction workers to be involved in building the new data centres, which will employ 50 people when operational.

The target date for commencing work on the first data centre is the second quarter of 2023, with AWS expecting to start construction of the second data centre in the second quarter of next year.

The EIS stated that Amazon’s three wind farm projects in Galway, Cork and Donegal are projected to deliver 229MW of renewable energy capacity each year and reduce carbon emissions by 366,000 tonnes of CO2. The three projects make Amazon Ireland's largest single corporate buyer of renewable energy.

The proposed data centres have a grid connection agreement from 2017 with Eirgrid for the site that allows for an increase of power to the site each year from 2022 to 2029.

Amazon had already secured permission to build two new data centres in Dublin in July 2022, with the two centres developed on a 3.75-hectare site in Clonshaugh Business and Technology Park in north Dublin. Amazon has been granted planning permission by Dublin City Council for the development, which includes demolishing the existing former Ricoh building on the site.

The data centres will each be in two-storey buildings with a gross floor area of 139K SF and 16K SF, respectively. The larger building will have solar panels at roof level and the proposal includes ancillary structures such as a sprinkler tank, pump house and security building.

Netskope To Develop In Dublin

Similarly, Netskope, a U.S. software company providing a computer security platform, is opening a new data centre in Dublin to expand its private cloud network. Known as NewEdge, the network serves millions of enterprise users across the world and consists of data centres across 60 regions.

Ireland’s strategic location close to the UK and mainland Europe, as well as its proximity to transatlantic cables, were cited by Netskope as reasons for its decision to create the new data centre in Dublin.

“Its geographical and political location is making Ireland a key strategic jurisdiction for the tech industry. With the opening of this data centre in Dublin, Netskope is well placed to deliver Secure Access Service Edge (SASE) solutions in the region,” Netskope Head of Ireland Brian Murray said.

Right now, the expansion of data centres leaves the Irish government in a dilemma. At a time when the tech giants are reducing headcounts internationally, threatening Dublin’s booming commercial real estate market, the strategic appeal of Ireland as a data centre hub is obvious.

Various projects are being undertaken by data centre operators in Ireland looking to reduce their environmental impact.

Microsoft is investigating if backup batteries from its data centre in Dublin could be used to support the growth of renewables on the grid, while Dublin energy agency Codema and data centre provider Equinix are exploring the reuse of waste data centre heat.

But without the infrastructure in place to service their enormous power demands — and with the concentration on capital — the country needs to be sure it can meet its environmental commitments and support a fast-growing sector.