Facilitating Data Centre Demand in Ireland

Ireland is at a critical juncture in the technology and real estate sectors. The AI revolution is fuelling a surge in demand for data centres, presenting the country with a prime opportunity to attract significant Foreign Direct Investment (FDI). Yet, this promising influx of capital investment is facing barriers such as protracted permitting regimes and lack of grid infrastructure. Persisting with this stance runs the risk of turning major technology companies and FDI away, toward countries who can step up to the plate.

AI driving data centre demand

AI has significantly driven the demand for data centre stock. As AI technologies scale globally, the amount of processed data has increased. This growth necessitates the construction and development of more data centres. Ireland, traditionally a technology hub, benefits from strategic advantages like:

• Deep-sea fibre cables to the US and Europe
• A highly educated English-speaking workforce
• A cool climate, and
• a low corporate tax rate

These naturally position Ireland to capture this wave of international investment. These factors would intuitively all point in one direction: Ireland being the location of choice for investment in data centre infrastructure.

This is a short-term opportunity for the Irish built environment to capitalise on the AI revolution but with the potential for a very long-term gain. The need for data centre capacity and fit for purpose planning regulations is immediate. Not only for the incumbent technology companies who already have, and are eager for more data centres, but also the new range of multinational companies that the AI revolution has revealed. These companies, require data centres and may consider investing in Ireland as a location.

Regulatory hurdles

The issues predominantly lie with Ireland's restrictive regulatory landscape and energy constraints, which pose significant barriers to new infrastructure projects. Critically, planning regulations must soon become fit for purpose. The Planning & Development Bill 2023 is intended to speed up parts of the planning process. However, it may still be some time before it is enacted and brought into force.

Grid infrastructure also needs to catch up with demand. For example, the connection criteria implemented by the Commission for Regulation of Utilities, intended to manage energy consumption and grid strain, has stifled the development and delivery of data centre projects. This prohibitive environment has put approved projects at a standstill. This undoubtedly raises a red flag for technology companies thinking of locating in Ireland. As a result, it poses a significant roadblock to FDI into Ireland. To remain competitive and continue to attract investment, Ireland must urgently address the permitting and grid barriers.

A push for Renewable Energy

The delivery of data centre projects carries potential benefits for ancillary industries such as construction, engineering, technology and renewable energy. Importantly, ESG credentials hold significant weight for data centres, particularly in the wake of new sustainability reporting regulations. As a result, new data centres tend towards zero carbon emissions through investing in green, renewable electricity initiatives that can be procured via Corporate Power Purchase Agreements.

Conclusion

The clock is ticking and as technology companies set their sights elsewhere, Ireland must rise to the occasion, speed up its permitting regime and ensure energy generation solutions are available to facilitate development of data centres. The window of opportunity is short, and a lucrative wave of FDI from AI based technology companies is at stake.

For more information and expert, please contact a member of our Real Estate team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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