Data centres are key to the delivery of Irish offshore wind projects and ensuring Ireland meets its renewable energy goals

• Expert report, by the leading management consultancy firm Baringa, highlights the key role of data centres for offshore wind (OSW) in Ireland, including by de-risking the investment required to build new OSW projects
• Report finds that data centres also represent a critical future market for OSW-produced electricity
• In order that Ireland’s twin decarbonisation and digitalisation goals can be achieved, Baringa recommends that the Government provide both certainty on data centre grid connections and a pathway for the sustainable growth of the data centre industry

Michael McCarthy, Director of CII, said: “The critical importance of data centres to the delivery of Irish offshore wind projects and the achievement of Ireland’s renewable energy goals has, until now, been little understood. As Baringa make clear, many of the planned offshore wind projects in Irish waters will be dependent on corporate power purchase agreements in order to be built. Data centre operators, with their strong balance sheets and track records in the purchase of renewable energy, are uniquely positioned to sign those corporate power purchase agreements with offshore wind developers. What’s more, data centres will also be the ideal market – given their demand profile and the decarbonisation their services enable across society – for the huge amounts of offshore wind that Ireland intends to produce in future.

“Ireland is still, of course, a number of years away from producing new offshore wind. Steps therefore need to be taken in the meantime to ensure the viability of the country’s data centre industry, given how integral it is to offshore wind delivery in Ireland. CII therefore welcomes Baringa’s recommendations that the Government deliver both grid investment and certainty on grid connections, as well as providing a pathway for the sustainable growth of the industry.”

Dr Mark Turner, Partner with Baringa, said: “This report, commissioned by Cloud Infrastructure Ireland, shows how data centres sit at the intersection of Ireland’s twin digitalisation and offshore wind ambitions. Our research shows that data centres can benefit offshore wind by providing the revenue certainty required to attract investment and to build projects. Vice versa, this offshore wind generation can help decarbonise Ireland’s data centre capacity – the critical infrastructure acting as the bedrock of Ireland’s digitalisation. Harnessing this two-way relationship can simultaneously help realise Ireland’s decarbonisation targets, maintain its position as a globally competitive provider of digital services, and seize the economic and social benefits that thriving data centre and offshore wind industries can bring.”

Donal Travers, Head of Technology, Consumer and Business Services at IDA Ireland, also welcomed the report, saying: “The decarbonisation of Ireland’s energy system and the digitalisation of the economy are vital goals in terms of enhancing Ireland’s competitiveness and our capacity to attract more foreign direct investment. That is why the development of offshore wind, and the strengthening of Ireland’s cloud infrastructure is so important. This timely report shows how those two objectives are not just interconnected but are in fact enablers of one another. Offshore wind and data centre demand are highly complementary – IDA will continue to work with our multinational clients to help ensure Ireland can get more of both in the years ahead.”

The key findings of the report include:

• The tech sector will be key to enabling the construction of OSW projects in Irish waters. That is because the delivery of many OSW projects will be dependent on their developers agreeing corporate power purchase agreements ((CPPAs) long-term contracts that allow companies to buy the electricity that will be generated from renewable energy projects) with large tech firms. Those CPPAs will de-risk the investment underpinning OSW projects and provide revenue certainty that their developers require.
• CPPAs will not just help deliver OSW projects, they will reduce costs for Irish bill-payers by directing private capital to help fund Ireland’s decarbonisation.
• If the Government’s current OSW targets are met, the country will likely produce significant amounts of unused or surplus power. Baringa forecast that supply from intermittent renewables in 2040 could be up to 55% greater than demand.
• Instead of being lost via dispatch-down (which refers to when OSW producers have to reduce their output), that power could be put to effective use in data centres, powering Ireland’s digital transition. Data centres represent an ideal market for OSW-produced electricity, given the stable and consistent nature of their demand.
• The report also includes a number of recommendations for both Government and the data centre industry on how best to ensure Ireland’s twin decarbonisation and digitalisation goals can be achieved. Those recommendations include:
  • That Government deliver grid investment and regulatory certainty on grid connections in order to support best use of Ireland’s renewable power.
  • Government should forge a pathway for the sustainable growth of demand-side industries, such as data centres, which are key to the development of OSW in Ireland.

Full Report here