New research by Friends of the Earth has found that soaring demand for data centres in Ireland has driven up energy prices, with Irish households paying the hidden cost.

WHAT DO DATA centres have to do with your electricity bill? About €1.4 billion worth, according to new research, which reveals how data centres have been driving up the wholesale price of electricity in Ireland through rising and constant demand on our grid.

The research — written by Dr Seán Fearon and commissioned by Friends of the Earth and Beyond Fossil Fuels — lays bare the impact of Ireland’s open-door policy on data centres in recent decades. Between 2015 and 2023, the data centre price effect meant households in Ireland paid an estimated €715 million extra for their electricity, or an average of €263 per household.

The Russian invasion of Ukraine in 2022 marked the worst of these years. The new research, “The Cost of Data Centres: Modelling the Household Electricity Costs of Ireland’s Data Centre Sector”, shows that during this period, data centres inflated the cost of already rocketing wholesale electricity prices, increasing households’ bills by 8.5% in 2022 alone.

Between 2021 and 2023, data centres’ energy use exploded, growing from a 14% share of the island’s electricity system in 2021 to 21% in 2023.

The impact was hardest for households on lower incomes. Anyone who was on social welfare during these years paid an extra €209 between 2021 and 2023, the equivalent of a week’s income, to service this data centre price effect.

This, in effect, wrote off the social welfare increase that people received in 2022, a vital household income that should have gone towards food, bus fares, clothes and school supplies, but was instead drained from the Irish economy.

A blank cheque for data

For many, this was money that people simply didn’t have. In 2022, 236,140 households fell into arrears on their electricity bills, 11% of all customers. This number increased again in 2023, with the number of people who were in debt on their electricity bills by 90 days or more rising.

Had the Irish state reigned in the spiralling growth of the data centre industry during those years of intense price shocks, households’ bills would have been lower. The recent US-Israeli war against Iran has shown that such shocks and supply constraints are becoming a pattern.

According to the research, if the world faces another energy price shock over the next few years, and we keep allowing data centres to expand, households in Ireland will face an additional cost of €1.6 billion. This represents the loss of hundreds of millions of euros from household incomes across Ireland due to policies which prioritise one industry above all others.

These additional costs are a direct result of state policies that have facilitated data centres to swamp the Irish grid, forcing us onto expensive and volatile fossil gas imports to meet the energy demand of the country.

Because data centres use so much electricity, the total demand in the Irish electricity market exceeds the availability of lower-cost renewables more often. According to the report, this means that gas sets prices more often, driving up prices.

Greenwashing tech

But what about renewables? Big Tech and the government often position data centres and renewable energy as a “twin transition” needed to increase clean energy. This assumption was core to the State’s Large Energy Action Plan, which puts continued data centre expansion front and centre of its energy policy.

However, the State’s plan doesn’t add up for the rest of us. If we meet our most ambitious renewables targets, and we limit data centre demand, then our research shows that the data centre price effect on our bills goes down. But it doesn’t disappear.

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