Big Tech’s AI dream turns into Ireland’s energy nightmare

BRUSSELS — The growth of power-hungry artificial intelligence is redrawing the map of Europe’s data centers — and Ireland, the heart of the continent’s tech scene, may lose out.

When users stream a movie or check their email, they connect to data centers — the physical backbone of the digital world. These rows of server racks have become a pillar of the economy in Ireland, the European Union base for many tech companies.

According to a recent study by United States-based analyst Synergy Research Group, Dublin is the world’s third-largest hyperscale data center hub — and the top site in Europe. Hyperscalers are large cloud providers such as Amazon, Microsoft and Google that operate massive networks made up of thousands of data servers.

But AI’s voracious appetite for electricity — which could double by 2026 — may force Ireland to surrender its cloud crown, as the country’s power grids struggle to keep up with demand.

“This is a risk we must take very seriously,” Irish member of European Parliament Seán Kelly said, lamenting the “major failing that we have not managed to sufficiently upgrade and expand our grid and make it fit for today’s [digitized] economy.”

As a result, the country’s electricity network operator EirGrid has been reviewing “data center applications … on a case-by-case basis since November 2021,” an EirGrid spokesperson explained. It’s enforcing a de facto moratorium on new hubs in the Dublin region, which already has highly concentrated energy infrastructure.

EirGrid reportedly warned Irish officials of a possible “mass exodus” of data centers from the country if the situation didn’t improve. Since 2016, it has highlighted “an increasing tightness between supply and demand in Ireland,” the spokesperson said.

Keeping the lights on

According to Ireland’s Central Statistics Office, data centers consumed 21 percent of all metered electricity last year — exceeding consumption by urban homes for the first time.

“There is a risk that the pace of demand growth is faster than the speed of which generation and network infrastructure can be built,” said a spokesperson for the country’s energy regulator, the Commission for Regulation of Utilities, confirming that longer-term risks included “power shortages” and  “increased costs for consumers.”

For MEP Kelly, “The absolute priority has to be to keep the lights on,” he said. Although, he added, “we should not be in a position where we have to turn away business and investment.”

“A properly developed and modernized transmission system would be able to do both,” Kelly added.

In the meantime, Ireland’s Ministry of the Environment, Climate and Communications acknowledged in a statement that “not all demand for data [center] development can be accommodated sustainably” in the shorter term.

“Data [centers], like all large energy users, have to exist within the boundaries of our climate legislation and targets, as well as our energy security,” they said, echoing a similar warning from Irish climate and environment minister Eamon Ryan in an interview with the Financial Times.

The winners and losers

As tech giants Amazon, Microsoft and Google pump billions into Europe’s cloud infrastructure that powers AI, the availability of (ideally, cheap and green) energy may emerge as a top criterion in determining their next investment destinations.

“The main data center markets, so places like Dublin and Frankfurt, are going to be kind of overrun with a need for power,” said Jesse Noffsinger, one of the authors of a new report by consultancy McKinsey, which forecasts that hyperscalers will drive about two-thirds of the demand for data centers by 2028. “We’ll see, in a lot of cases, the data center needs [to] migrate to other places,” he explained.

It’s unclear who is set to benefit from redrawing this map.

“Getting a data center doesn’t necessarily mean a good thing,” Noffsinger continued, citing the challenge of upgrading infrastructure and building up the energy supply if authorities don’t want energy-hungry facilities to absorb a lot of existing power. That raises the cost of electricity for all customers in the process.

Countries with abundant carbon-free electricity and lower temperatures — which would minimize the energy needed to cool down IT equipment — could make the best of the situation, the report stressed, as tech multinationals want to both keep their energy bills down and reach net-zero targets.

The Nordics, with their cooler weather, and France, with a solid share of nuclear in its energy mix, could come out on top — and France knows it.

“We need to have low-carbon, inexpensive, controllable energy, because we keep forgetting artificial intelligence can help with that. That’s the priority,” French President Emmanuel Macron recently told Variety magazine.