The creation of a green data centre strategy in Northern Ireland would act as a significant draw for inward investment, ensure more efficient use of renewable energy, re-energise the development of renewable generation, and address many of this region’s underlying structural issues.
But data centres have an image problem – they consume large amounts of energy, employ few people once built, and can require significant volumes of water for cooling.
The Republic, which is home to over 90 such facilities for businesses including Microsoft, Apple, Google and Amazon, is increasingly saying no to new projects.
On this basis, Northern Ireland’s lack of encouragement or data centre development policy seems entirely logical, despite increasing interest from investors to look north.
But this is an oversimplification of the matter, with negative rhetoric overshadowing what could actually be a fantastic opportunity for both economic growth and faster decarbonisation of Northern Ireland.
Given the explosive growth in the digital economy and AI in particular, data centre demand is booming, with forecasts indicating that global demand could triple by 2030. The Republic has proven to be an attractive destination due to strong data legal frameworks, temperate climate, good data connectivity, and strong renewable energy supply.
The UK government certainly recognises the opportunity and is seeking to encourage further investment across GB, recently designating data centres as Critical National Infrastructure. Meanwhile, the Scottish Government has published a dedicated Data Centre and Digital Connectivity action plan. But Northern Ireland has no such plan, with recent feedback from potential investors that despite repeated attempts, they’re achieving no traction here.
So how could Northern Ireland harness the opportunity?
The answer is to learn from Ireland’s experience and approach data centre development in a more structured and measured way to create a green data centre industry which is strategically deployed to actively address some of the country’s underlying structural issues.
Firstly, Northern Ireland currently wastes over 20% of its renewable energy generation by turning off wind farms when we don’t have sufficient demand or grid capacity to use it. By deploying consistent energy loads, such as data centres, in the right locations and on Northern Ireland’s terms, we can utilise this wasted green energy, reducing curtailment compensation payments to generators which will ultimately reduce energy prices for all consumers.
Secondly, despite achieving 40% renewable electricity penetration by 2020, the north’s renewable deployment has stalled, with less than 90 MW of capacity deployed in the past five years. Over the same period, the Republic has deployed more than 15 times this volume. This has largely been due to a lack of demand growth on the grid, as well as a seven-year gap in any subsidy support schemes.
By requiring data centres to power their facilities with 100% new incremental renewable electricity (which most are already committed to doing), we can stimulate a new wave of renewable, grid, and infrastructure investment across Northern Ireland, including our first offshore wind developments, while letting private sector funding displace taxpayer support.
Thirdly, data centres will bring significant investment to Northern Ireland. Since 2014, Ireland has attracted over €15 billion of new infrastructure investment into the country, creating new local supply chains, employment and skills which have resulted in not only local activity but also spawned a number of international success stories which are now exporting their skills around the world. Given Northern Ireland’s engineering pedigree, we are well placed to replicate this.
With Northern Ireland’s sluggish economic growth and increasingly poor decarbonisation progress, data centres stand out as a rare opportunity to attract inward investment from some of the world’s leading companies in a way which harnesses our plentiful renewable energy resources and helps decarbonise the environmental footprint of an industry which NI consumers are partly responsible for creating. Northern Ireland should at least explore the opportunity.
- Russell Smyth is a partner in KPMG Ireland and leads the firm’s energy advisory business.
