The Commission for Regulation of Utilities (CRU) has produced a consultation paper which identify data centres as a growing threat to security of supply of electricity (SoS). This was done in response to communications from EirGrid, the operator of Ireland’s electricity transmission system. The CRU’s proposals seek to support SoS by placing restrictions on data centre applications for connection. The preferred solution introduces criteria against which electricity system operators should process and connect data centres to the grid.
Why focus on data centres?
The focus on data centres is not new and can be explained by the unique nature of the sector, as in Ireland it requires more electricity than all other industries combined. The CRU reports that data centre Connection Agreements for over 1,800MW are already in place, with up to 2,000MW of additional requests received. To put this in context this, Ireland’s historical peak electricity demand across all electricity customers stands at around 5,500MW. A large town like Kilkenny would need connection capacity of approximately 60MVA, which can roughly be equated to 60MW.
The size of this data centre electricity demand represents a “particular challenge” to security of supply and the promotion of renewable electricity, both of which the CRU is required by law to promote and protect.
EirGrid’s forecasts predict that data centres’ requirements for electricity energy will continue to grow over the next decade and will make up approximately 25% of all Irish electricity demand by 2030. However, this prediction relates only to the data centres that are already connected. This highlights the urgent need to manage the connection of further data centres.
EirGrid’s All-Island Generation Capacity Statement 2020-2029 predicts supply and demand over the next ten years, forecasting a medium-term risk of generation deficits. There has also been a decrease in the delivery of Capacity Renumeration Mechanism-related generation projects. Action is required to avoid the consequences of demand exceeding supply, which could result in temporary blackouts for all electricity customers.
As we have noted previously, in 2019, EirGrid did unilaterally impose a data-centre-specific “Connection Offer Process and Policy”. This involved the imposition of “flexible demand” arrangements that, in constrained areas like Dublin, required a connected data centre to reduce a portion of its consumption in response to an instruction from EirGrid. The CRU has now chosen to provide regulatory support.
The CRU’s proposals
The CRU has put three proposals out to consultation, namely:
Doing nothing, i.e. leaving the Data Centre Connection Offer Process & Policy as it is
Imposing a moratorium on new data centre connection applications for several years, or
An intermediate approach which involves requiring the system operators to prioritise the processing of data centre connection applications based on :
Location relative to existing levels of system “constraint”
The level of dispatchable electricity generation or storage that the data centre intends to install, and
The data centre’s ability to reduce its electricity demand, including by using its own generators or storage assets.
It is worth noting that the intermediate approach appears to be clearly favoured by the CRU.
These proposals indicate the CRU’s willingness to take steps to protect security of electricity supply in the face of demand from data centres. It also illustrates the CRU’s inclination to put existing Irish grid practices on a formal regulatory footing, including for the purposes of the CRU’s dispute resolution jurisdiction. It is a welcome opportunity for the industry and wider Irish society to engage formally in consultation on the issue. Should the CRU decide to adopt its preferred solution, developers of new data centres will need to carefully consider their:
Preference for the Dublin area
Appetite for including electricity generation and storage within their projects, and
The extent to which they can operate flexibly in their demand.
Specialist legal advice should be sought when seeking to finance, develop, acquire or procure services from data centres. For more information, please call a member of our Data Centres team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.