CRU Due to Set Out New Rules for Data Centre Connections

The CRU is expected to propose a new Large Energy Users Connection Policy that governs how large energy users (and data centres) apply for grid connections. Our Construction, Infrastructure & Utilities team outlines what this could mean for data centre developers.

Current Grid Connections

Ireland remains an important data centre hub and has developed a sophisticated and skilled eco-system of related expertise across the sector.

But over recent years, grid access for data centres has become increasingly difficult, and in some areas, prohibited. Under a direction issued by the Commission for Regulation of Utilities (CRU) in November 2021, new data centre grid connection applications are assessed against the following criteria:

1. Location – whether the proposed site is in a constrained or unconstrained part of the electricity system
2. Dispatchable generation or storage – availability of firm onsite or proximate generation or energy-storage equivalent to or greater than their demand and meeting technical availability standards
3. Demand-flexibility capability – ability to curtail or offset load at the System Operator’s instruction

These measures were introduced to protect security of supply while accommodating growth in electricity demand. Capacity in the Greater Dublin area is particularly limited, and EirGrid indicated in 2022 that new connections are unlikely before 2028.

The CRU direction was essentially a reactive measure intended for short-term application, and has since been overtaken by a number of wider Irish Government policy objectives. For this reason, the CRU subsequently ran a consultation exercise in early 2024 with the aim of establishing a longer-term pathway for new Large Energy User, or ‘LEU’, connections to the electricity and gas systems.

Large Energy Users Connection Policy

The CRU published a Proposed Decision Paper on Large Energy Users Connection Policy, and its main features include:

• Scope: It applies to data centres seeking to connect to the electricity network, and the CRU also invited views on whether a minimum import capacity threshold should determine when the policy applies.
• Dispatchable generation: Applicants must provide dispatchable generation and/or storage, either onsite or proximate, that is capable of meeting technical availability standards and participating in the Irish Single Electricity Market (SEM). This approach broadly follows the previous data centre grid connection regime. That said, however, the crucial additional element is the requirement that the dispatchable generation and/or storage must participate in SEM.
• Mandatory demand curtailment: Connections meeting onsite or proximate generation standards will not be subject to mandatory demand curtailment (MDC). MDC is a measure with its regulatory origins in CRU’s 2024 Review of Large Energy Users connection policy. It allows the System Operators (SOs) to instruct affected users to reduce or cease importing electricity from the grid at short notice. The measure is widely regarded as incompatible with preferred modes of data centre operation. The fact that MDC is mentioned at all in the Proposed Decision suggests that it will be retained for any Irish data centres connected under the previous policy, and which are currently subject to MDC.
• Demand Flexibility: The Proposed Decision does not include a general requirement that new data centres be capable of exercising “demand flexibility”. However, the SOs will be permitted to impose demand flexibility requirements on data centres “as deemed necessary on a case-by-case basis” and depending on the circumstances of the local system. It is also anticipated that SOs will develop voluntary schemes that reward demand flexibility, and which may be commercially attractive to connected data centres.
• Location: SOs must continue to assess whether sites are in constrained areas of the grid. To inform applicants, SOs must publish capacity maps and constraint lists, and merits of locating close to renewable generation and storage are noted. Helpfully, SOs will be required to regularly publish information as to the location of current and future connection capacity as well as any constraints on the electricity grid.
• Renewable procurement / reporting: A significant element of the Proposed Decision is that new data centres will not be subject to any minimum requirement regarding the procurement of renewably-sourced electricity. However, data centres will be required to self-report to the SOs annually on a number of metrics related to their use of renewable energy and the emissions caused and abated by their activities. The SOs will annually publish a summary of this information. Data centre operators will be conscious of their reporting obligations under the new delegated regulation ((EU) 2024/1364), and hope for consistency across both reporting regimes.

The consultation closed on 4 April 2025, and a final decision is expected before the end of 2025. Once published, the new policy will supersede the 2021 regime and become the default basis for processing LEU connection requests.

Once finalised, the CRU may issue a new direction to EirGrid and ESB Networks under the Electricity Regulation Act 1999 and will likely update standard connection agreements to reflect the new obligations.

Our view

When a final decision is announced, this should provide welcome clarity for developers and the sector generally. Clarity alone is very welcome given the reduction in the pipeline of new data centres in Ireland, particularly as other jurisdictions both welcome, and benefit from, significant investment.

Some data centre use cases allow for locational flexibility. With this in mind, developers will hope the eventual clarity allows for the different data centre use cases to be appropriately accommodated and not unduly restrict smaller, enterprise data centres from being located in the Greater Dublin area.

Some see data centres as a burden on Ireland’s grid infrastructure and a setback to achieving our decarbonisation goals. However, they can also play a positive role by:

• Incentivising renewable deployment through Corporate Power Purchase Agreements (CPPAs) and similar structures.
• Assisting SOs with grid infrastructure investment at, and around, their facilities.
• Providing increased demand flexibility to help SOs balance the electricity system.

For further information and expert advice regarding existing or contemplated data centre developments, please contact a member of our Construction, Infrastructure & Utilities team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.