Large energy users have a crucial role to play in embedding greater resilience in Ireland’s energy system. David Cashman explains why
Following recent geopolitical developments and the subsequent supply chain disruption to energy resources here in Ireland, ensuring the security of supply is paramount.
With one of the highest ratios of energy import dependency in the EU, Ireland is more exposed than other countries to sudden shocks and disruption. As a result, embedding increased resilience in our energy system is a priority, as set out in the Government’s Energy Security in Ireland to 2030 strategy.
Large energy users (LEUs), such as data centres, have a vital role to play in driving this resilience.
Electricity demand is projected to grow significantly in the years ahead, and LEUs account for a sizeable portion of this.
With an annual usage of over 500,000 kWh, EirGrid estimates that, by 2031, LEUs will account for 28 percent of total energy demand. While the growing number of LEUs represents strong economic activity, it does mean that a small number of these large consumers will be key to ensuring the security of supply.
The question then becomes: how can this security be maintained without the cost of increased emissions?
The electricity system must continue to be balanced – accounting for increasingly tight capacity margins, as highlighted in the annual Generation Capacity Statement – while LEUs must play their part in delivering on emissions reduction targets.
With the number of system alerts forecast to increase – coupled with delays in connecting new generation capacity (due to planning permission, environmental impacts, and supply chain constraints) – LEUs must look to introduce interim measures now that, while ensuring security of supply, do not increase emissions.
Legislative and regulatory landscape
Climate Action Plan 2024 builds on initiatives mandated in the 2023 plan, including the introduction of incentives to drive low-carbon consumption and increase LEU flexibility in demand.
Following Climate Action Plan 2023, the Commission for Regulation of Utilities (CRU) published an initial view of a demand-side strategy – the National Energy Demand Strategy (NEDS) – for consultation.
This proposes a range of initiatives and builds on the ambition set out in the Energy Security in Ireland to 2030 strategy which highlights how LEUs “can lead and contribute to this transition by…shifting energy demand away from peak times or at times of system stress and moving demand to times of high renewable generation”.
A core tenet of NEDS is a review of LEUs’ connection policy, with the associated consultation closing in late February. This review will inform the development of a new pathway for LEUs to connect to the electricity and gas systems, which will minimise carbon emission increases while accounting for system capacity.
This review is very much in line with the Government Statement on the Role of Data Centres in Ireland’s Enterprise Strategy, which sets out how new data centre sites will account for the additional demands placed on energy infrastructure, demonstrating a clear pathway to decarbonised services.
Five key measures
There are five measures LEUs can adopt now to support Ireland’s decarbonisation plans whilst ensuring security of supply:
1. Decarbonising behind-the-meter generation
Implementation of cost-effective alternatives to carbon-intensive backup generation, including:
- Matching gas with domestic green gas certificates; and
- Transitioning sites’ backup generators to renewables-based, biodegradable fuels, such as hydrotreated vegetable oil.
2. Investing in behind-the-meter storage
Investment in on-site, behind-the-meter storage means LEUs can utilise stored energy at peak times and times of system stress. This ensures high network charges – those associated with electricity imported from the grid – are minimised, while LEUs can ‘sell’ stored energy back to the grid (thus creating an additional revenue stream and return on behind-the-meter storage investment).
3. Unlocking flexibility in load
At times of security of supply events, disruption to business-as-usual operations can lead to an increase in emissions. This can be minimised by unlocking flexibility in load:
- Flexible load: Reducing reliance on the electricity system by using behind-the-meter generation and/or storage to meet electricity demand.
- Flexible load times: Rescheduling server load processing to a time when system congestion is lower, or renewables are more abundant on the system.
- Flexible load locations: Relocating server load processing from one data centre to another if there is lower demand – or higher renewables outputs – in the alternative location(s).
4. Adopting Corporate Power Purchase Agreements (CPPAs)
Arrangements whereby a company procures renewable electricity directly through a contractual agreement with a renewables-based generator are known as CPPAs. These are an attractive option for LEUs as they mitigate the impacts of energy price volatility whilst also reducing electricity-related emissions.
5. Implementing enhanced emissions and energy usage reporting
The new Corporate Sustainability Reporting Directive – coupled with broader ESG scrutiny – places additional demands on companies regarding the disclosure of climate and environmental data. With mandatory requirements set to be introduced, LEUs should now begin to increase transparency and reporting on emissions and energy usage, starting with materiality/gap and ESG maturity assessments.
Building future resilience
Rising electricity demand and a dependency on energy imports mean there is an urgent need to embed increased resilience in our energy system. LEUs have a crucial role to play in driving this national resilience. This cannot come at the cost of increased emissions, however.
Adoption of interim measures that will ensure security of supply without increasing emissions means LEUs are in line with broader legislative and regulatory proposals and are also building future resilience.
David Cashman is Director of Power and Utilities at EY
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