Ireland may seem like an unlikely energy case study. With a population of five million and a centralized grid with a peak capacity of just over six gigawatts, the island is a “pebble on the edge of Europe,” as Garry Connolly, founder of policy advocacy group Digital Infrastructure Ireland, describes it.
Yet Ireland’s experience has become highly relevant to the global challenge of rising energy demand. Dublin hosts the world’s third-largest hyperscale data center hub; the grid is so congested that in some areas, new data center connections have been paused; and over 20% of Ireland’s electricity is used by data centers.
(By comparison, U.S. data centers consumed about 4.4% in 2023, a share expected to grow to 12% by 2028, according to a December 2024 Lawrence Berkeley National Laboratory report.)
To try and solve its grid challenge, Ireland is implementing a series of dramatic energy policy changes. And two changes in particular have together yielded a debate over what role the country’s largest energy users should play in ensuring its energy security: To be allowed to consume as much as they do, do they have to be producers as well? In other words, should they become “prosumers”?
Last month, the Irish government approved a private wires policy that allows private enterprises to build their own electricity infrastructure to connect directly to generation sources. This ideally will reduce congestion on the grid, particularly around Dublin where the largest number of data centers are sited.
According to Matt Kennedy, executive director at IDA Ireland, Ireland’s foreign direct investment agency, the move is explicitly designed to remove power from the grid, reducing grid congestion and enhancing resiliency. “It’s also an opportunity for industry to be able to move power between sites without having to go through the grid, so it enables them to potentially purchase power more cheaply,” he said.
In parallel, the country is also mulling a proposed connection policy for large users that would, among other things, require new data centers seeking to connect to the grid “to provide generation and/or storage capacity to match the requested data centre demand capacity,” either on-site or in proximity to the data center. This power generation would also have to be made available to the grid in times of need. The policy has undergone two rounds of consultation, and a finalized version has not been published yet.
Patrick Liddy, CEO of the Demand Response Association Ireland, who participated in the consultation around the large energy users connection policy, said that a mandate makes sense, given the state of the country’s grid.
“We want the business that is data centers, but we are genuinely running out of power, and therefore they are the ones who have to shoulder the burden,” Liddy told Latitude Media. “It’s a rational decision.” But, he added, it’s “a bitter pill to swallow,” to invite hyperscalers like Google or Microsoft to take on a role that has been traditionally reserved for utility companies.
“You’re asking a company which describes itself as [an energy] consumer to sign up to the grid code and to the energy market codes, which makes it an energy company,” he said. “So if in two decades, we look back and we say, ‘How did Google become the dominant energy company in the world?’ well, we’re to blame, we invited them in.”
Connolly at Digital Infrastructure Ireland sees this as a familiar industrial evolution. “Every industrial age has had similar situations, where the baker has to become an underwriter of corn for the security of his supply,” he said. “If you want to sell ten million loaves of bread every Monday, then you have to look at your supply of corn… or your service level agreement with your end user is compromised.”
‘All that industry is looking for is policy certainty’
But the proposed policy has drawn criticism.
For one, Bobby Smith, head of Energy Storage Ireland, said it risks tilting the market toward gas generation rather than cleaner technologies like storage. Under the draft, generation or storage must match a data center’s maximum capacity, but that capacity is “de-rated” depending on the technology’s reliability. Because storage must recharge, it’s considered less reliable and is de-rated more heavily than gas.
“Storage can be de-rated 40-50%, which means that for a 10-megawatt data center, you might have to install 20 megawatts of storage,” Smith said. “You have to overbuild the storage quite a bit to meet the requirement… which doesn’t seem like a practical thing for any data center to do.” If he’s right, an influx of gas could risk compromising Ireland’s climate goals of halving its emissions by 2030, and reaching next zero by 2050.
And, more broadly, there are concerns that forcing data centers to build on-site generation would inflate their development costs — and ultimately lead them to take their business elsewhere.
“So if Ireland puts out this requirement and the U.K. does not, then it may be more attractive to put your data center in the U.K., and then what have we achieved?” Liddy said. “We’ve solved the [data center] problem, but we have missed out on a major industrial revenue.”
That said, he acknowledged that if similar requirements were adopted globally, like many believe is bound to happen, Ireland’s policy would not stand out.
A finalized version of the policy is expected in the next couple of months. Whatever the details, Kennedy said that simply having clear policies is valuable.
“It’s a competitive advantage to ensure that a policy gets in place to provide certainty to those industries that are both located here and moving here,” he said. “All that industry is looking for is policy certainty.”
Connolly agreed, adding that currently the country’s policy approach to solving the data center problem is “bits of everything.”
“It’s like on Saturday, when my young daughter was making a cake for us,” he said. “The kitchen was an absolute bit; there was egg; there was flour. But [now] I see a beautiful cake in the fridge. The kitchen is clean.” Ireland’s data center policy world, he added, is “still in that Saturday stage.”
A version of this story was published in the AI-Energy Nexus newsletter on August 13. Subscribe to get pieces like this — plus expert analysis, original reporting, and curated resources — in your inbox every Wednesday.
