Data centres forcing the price of electricity bills higher

Data centres have added around €360 to household electricity bills by driving prices higher, a new report is warning, writes Helen Bruce.

The report, commissioned by Friends of the Earth Ireland and Beyond Fossil Fuels, claims that data centres have drained €715m from the Irish economy, and could take a further €1.6bn from households over the course of the next decade.

It says that during the last energy crisis, between 2021 and 2023, the poorest households paid an extra €209.

The report warns that unless Government policy changes, households could have to pay an additional €1.43bn in electricity costs linked to data centre growth between now and 2034, equivalent to between €295 and €644 extra per household.

The independent report, The Cost of Data Centres: Modelling the Household Electricity Costs of Ireland’s Data Centre Sector, warns that in the event of another global energy shock caused by events such as the Ukraine war and the Iran crisis, additional costs could soar to as much as €1.6bn.

The report’s author, postdoctoral researcher Dr Seán Fearon of the University of Surrey, explains that in Ireland’s electricity market, the cheapest available electricity is chosen to meet demand first by operators – typically this is renewable power.

As demand increases, the next cheapest source of electricity continues to meet demand, working up to electricity derived from more expensive fuels.

When this happens and demand is high, the marginal price of wholesale electricity increases.

Dr Fearon said the electricity demand of data centres is driving prices higher, as available renewables are not providing enough power, and gas is often becoming the price setter, especially at peak times.

His report says the Government must look at its policies concerning data centres, as Ireland continues to grapple with some of the highest electricity prices in Europe, growing energy insecurity and legally binding climate targets.

It said the explosive growth of data centres during the late 2010s and early 2020s has significantly increased Ireland’s dependence on fossil gas generation, exposing households and businesses to volatile international energy prices.

The report found that on a per capita basis, data centres in Ireland consume a larger share of national electricity demand than in any other reported country, accounting for more than 22% of the State’s electricity use.

Launching the report today, Rosi Leonard of Friends of the Earth Ireland, said: “Households in Ireland have effectively been paying a hidden data centre tax on their electricity bills.

“At least €715m has already been drained from people’s pockets, and another €1.6bn could be lost over the next decade if current policies continue.”

She called for the Government to introduce a moratorium on new data centres, and limit the expansion of existing facilities.

The research comes as the European Commission looks to triple data centre capacity in the next five to seven years.