Irish Data Centre Expansion: Economic Benefits Overstated, Energy Costs and Emissions Rising

Economic analyses from the 1970s often overstated project benefits by assuming linear growth and ignoring full employment. Since the early 1980s, Ireland's Department of Finance and ESRI have used sophisticated economic models. Today, with full employment, growth in one sector often displaces another. For example, while data centre construction added €1.4 billion to national output in 2024, this likely diverted resources from other construction projects due to the fully employed building sector.

Simplistic studies, like a recent one for the Department of Enterprise, still exaggerate data centre benefits, claiming they enable a third of national output without detailed econometric backing. Ireland's IT sector flourished for 20 years before major local data centre investment, indicating their non-essential nature for much IT work, which can be done remotely via fibre-optic connections. Only a small fraction of the Irish tech sector requires proximity to data centres due to infinitesimal time delays.

Data centres consume massive energy, currently 22% of Ireland's electricity, projected to rise to 30% by 2030. This necessitates costly expansion of electricity generation and transmission, driving up prices for households and businesses. This collateral economic damage is also observed in countries like the US. Furthermore, data centres contribute to greenhouse gas emissions, making it harder and more expensive for other sectors to meet climate targets.

Their constant operation makes them unsuitable for intermittent wind or solar power, often relying on fossil fuels when renewables are down. Countries like Denmark and Singapore have halted data centre expansion due to energy and emissions concerns. Ireland should stop future data centre growth unless they commit to 100% green energy, using biomethane or green hydrogen when renewable sources are unavailable, to avoid further costs for consumers and businesses.