The Irish market has benefited from the country’s relative proximity to the US, excellent subsea cable links, the fact it is English-speaking and also that it offers an advantageous business tax regime.
The main big cloud service providers like Amazon, Microsoft, Google, IBM and Facebook are well-established players in the data centre market, whether through a direct physical presence or through colocation arrangements with the main data centre operators.
But the big new building announcements just keep coming. Equinix recently heralded the construction of the first building of its DB5x campus in Dublin, which is 100% pre-leased to a “major hyperscaler”.
And Echelon Data Centres has just won planning permission for its second data centre development in Arklow, which could represent an investment of around €500 million. The project is one of six data centre sites – with a combined capacity of 500MW – that the firm has in planning and development in Ireland and the UK.
The 900MW island
According to industry body Host in Ireland, there are 70 operational data centres in Ireland – offering about 900MW of capacity – with another eight under construction that are designed to offer a further 255MW.
That 900MW is about 100MW higher than the capacity offered by London, and the upcoming 255MW certainly indicates that the data centres are getting bigger in terms of both size and power.
The growth is further indicated by the fact that 10 data centres have become operational in the last 12 months alone.
Construction investment in data centre facilities in Ireland totalled €7 billion in the decade between 2010 and 2020. The coming five years will see a further €7 billion of investment, based on data centres with approved planning permission.
The Host in Ireland/Bitpower figures project a further €1.33 billion in data centre construction spending in 2021, with the pace set to quicken after that.
The demand for the data services that these data centres are supporting is being underpinned by improved broadband to homes and businesses. At the back end of 2019, the Irish government backed a national fibre roll-out with almost €3 billion of state aid.
National Broadband Ireland (NBI), which was established by investment firm Granahan McCourt, signed a deal with the Irish government to deliver the country’s National Broadband Plan (NBP).
The project aims to end the digital divide between Ireland’s urban and rural communities, with it promising to provide “equal opportunities for every home, farm and business in Ireland”.
Bumps in the road
Along this growth journey there have certainly been the bumps in the road – as mentioned – largely around planning and legal issues.
As the size of the data centres have grown in response to the spiralling usage of cloud services by citizens and businesses, some of those citizens have incidentally rebelled against new data centre builds. They have expressed concerns around the large amount of power they will use, the amount of water needed to cool them, and the low number of jobs created to manage the facilities, among other issues.
Both Apple and Amazon have been in the middle of such battles in the past. Apple was forced to walk away from a potential €1 billion project after being bogged down in a planning battle that lasted years, and Amazon has eventually prevailed after winning out in other disputes.
What these spats did was force the Irish government to more clearly set out the planning rules around new data centre builds, before operators and citizens had to consider court action to get their point across.
With all that said though, there have been other more major potential problems to contend with, such as Brexit and the coronavirus pandemic.
In the case of the former, the UK is Ireland’s biggest trading partner, and Ireland was seen as potentially the biggest victim of any disrupted trade.
So have these two issues had any real impact on the Irish market? Anthony McDermott, a director at construction consultant Mitchell McDermott, says: “We did think that both Brexit and the pandemic would have an effect on operators’ construction plans, but there has been no adverse effect on progress at all.
“In the case of the pandemic, there has been very little Covid appearing on the new sites.”
That’s obviously good to hear, and maybe the demand for remote data capacity, generated by people working from home during the pandemic, created the impetus to bring new data centres online as swiftly as possible.
Skills
So how about skills – is there a shortage? McDermott says: “As a country we have well over 20 years of experience in building data centres, both here and abroad. There are plenty of Irish contractors working in the US, the Nordics and plenty of other countries.
“Irish innovation and skills in the market are well ahead of the competition. We can afford to export our skills and bring other people’s data back here to store.”
Simon Driver, head of data centre sales and business development manager at Indigo Telecom Group, is a bit more cautious on the jobs front. His company is involved in the aforementioned NBI fibre roll-out across Ireland.
Driver says: “Skills shortages in network engineering have made people, rather than equipment, a market differentiator for telcos. Our industry is facing the perfect storm of an ageing workforce and a lack of fresh blood coming in.
“We have a vast selection of advanced technology to choose from, but worryingly we are at risk of reaching a point where we don’t have a similar selection of advanced, clever people.”
He says a combination of specialist third parties and internal resources is needed to get infrastructure built, and that third parties must be committed to investing in programmes to recruit new blood into the industry and train and develop them appropriately.
Noel O’Grady, director of Ireland sales at Sungard AS, echoes the concerns about skills. “Ireland has one of the youngest and most diverse workforces in Europe, and the clustering of technology companies and data centres has provided a critical mass of talent and skills to satisfy current demand,” he says.
“That being said, with the market set to see increased growth in the next few years as cloud becomes even more important for businesses, and statistics suggesting the number of pupils choosing IT subjects at exam level is decreasing, organisations need to ensure there is no gap in skills in the not too distant future.”
He says apprenticeship programmes and early insights into the sector at schools are going to be needed to ensure a steady supply of skilled employees.
Power consumption
The question of energy used in data centres is also an issue that is not going away.
“The most important factor in the continuing IT infrastructure and data centre growth is decarbonising it,” says O’Grady.
“Research from EirGrid [Ireland’s power transmission system operator] highlights that, by 2028, data centres could account for 29% of Ireland’s total energy demand. Finding a way to address this demand sustainably and safely without contributing to the growing climate crisis will be key.”
According to Host in Ireland/Bitpower figures, the data centre industry was responsible for 1.85% of electricity-related carbon emissions in the country during 2020, and this is expected to reach 2.2% by 2025.
Arguably, this rise isn’t startling, considering that data centre growth is expected to double over the next five years.
It must also be taken into account that the Irish state has a renewable electricity target for the whole country of 70% by 2030. In 2020, that share of renewables reached 43%, so the national progress the data centre industry can feed into is clearly there. The actual national target for 2020 was 40%, so it was surpassed by three percentage points, helped by increased deployments of wind-generated power.
Donna Gartland, CEO of Codema - Dublin’s Energy Agency, is enthusiastic about the potential for data centres to play their part in reducing overall emissions. She says: “Municipal heating systems fed from industry are not new. For instance, in 1920s Denmark you had coal-fired heavy industries using the excess heat they generated to send hot water pipes to communities to heat homes.
“Now, getting away from fossil fuels, data centres can be the new fuel – moving from a dirty solution to a clean one.”
Such a solution is now being delivered by Amazon at its Tallaght data centre, which is sending its excess heat to warm local people’s homes.
Such activities, playing into the country’s overall sustainability efforts, are seen as essential by many.
Marc Garner, VP for the secure power division at Schneider Electric UK & Ireland, says: “As capacity increases so will the need for sustainable operations. A recent report from us and 451 Research found that 97% of colocation customers are demanding contractual commitments to sustainability.
“It is clearly a key topic that accompanies data centre growth in Ireland.”
