Case of Study

Dublin's standing as Europe's second-biggest datacentre hub could be on potentially shaky ground as Ireland's electricity infrastructure creaks under the pressure of so many power-hungry server farms plugging into the national grid.

Dublin in Ireland has benefited from enviable amounts of overseas tech investment over the past decade that has served to transform it into one of Europe's largest hyperscale datacentre hubs.

And with no signs of a slowdown in demand for datacentre capacity, concerns are mounting about whether Dublin and the surrounding area has the electricity infrastructure needed to serve the needs of the growing number of power-hungry server farms springing up there.

The matter has been the subject of separate consultations by Ireland's national grid operator and the country's energy regulator in recent months, while opposition party politicians introduced a bill in June 2021 designed to slow the pace of datacentre developments in Dublin on energy security grounds.

According to the most recently published data from real estate consultancy giant CBRE, some 139MW of colocation capacity has been leased in Dublin to date, and a further 476MW of supply has been snaffled up by the hyperscale cloud and internet giants. Combined, these figures mean the city is now home to the second-largest datacentre market in Europe.

"When it comes to colocation, Dublin is a small market," says Penny Madsen-Jones, head of datacentre research, advisory and transaction services for Europe, the Middle East and Africa (EMEA) at CBRE.

"It's nowhere near the size of London, Frankfurt, Amsterdam or Paris, but when you add the contribution of the hyperscalers to the mix, that changes the picture dramatically."

Much of Ireland's datacentre growth has been fuelled by the efforts of IDA Ireland, an agency concerned with attracting inward foreign direct investment into the country, and Host In Ireland, whose focus is on championing Ireland as a good place for hyperscale and colocation datacentre operators to set up shop.

"Ireland as a country, ignoring datacentres for a second, has done a superb job in attracting US tech firms," says Steve Wallage, managing director of datacentre-focused analyst house Danseb Consulting. "And that is a reflected in the fact that Amazon, Google and Microsoft all have a presence there and they all employ around 6,000-7,000 people in Dublin.

"IDA Ireland has always had a very large Silicon Valley presence, so they've been pushing Ireland even within the west coast of America, and you can see how successful they have been by how well established the hyperscalers are in Dublin."

Ireland: a popular destination

Marketing aside, there are other reasons why Ireland has proved to be such a popular destination for the US tech giants to build out their European headquarters and datacentre regions, says Wallage.

"It's the first place they [the US tech firms] hit on the way to Europe, there is no language barrier, it has a strong and educated workforce, and there have also been tax breaks introduced to encourage them to move in as well," he says.

Also, the Irish government revamped the country's planning system several years ago, so that datacentres that meet certain size thresholds were reclassified as "strategic infrastructure developments", so the processing of their planning permits would be fast-tracked.

Ed Galvin, CEO and founder of datacentre-focused analyst firm DC Byte, describes the explosive growth of Ireland's datacentre market as a "great Irish success story" based on how much economic benefit and investment the sector has pulled into the country as a whole.

"We are tracking over 621MW of live IT capacity, equivalent to around 4.7bn of investment, and there is more than 900MW, or 6.8bn of investment, either under construction or planned to be built in the next three to five years," he says.

"With those figures in mind, total investment in the datacentre sector, not including the IT hardware and associated networking and facilities management services, averages out at around 1.5bn a year of inward investment. If we did account for the full stack of equipment and services, that figure is likely double, or even triple."

Unsustainable datacentre market growth

From an investment and economic perspective, Dublin's development into a major datacentre hub is a huge feather in the country's cap, but it has brought into sharp focus shortcomings in Ireland's electricity infrastructure, which is heavily reliant on non-renewable natural gas.

"The Irish national grid wasn't built to sustain such high, intensive use of it," says CBRE's Madsen-Jones. "It's not that there isn't enough power - the issue is with transmission and getting the power to where it needs to be."

Indeed, a report by theIrish Academy of Engineering in August 2019said Ireland's power networks and infrastructure would require 9bn of investment by 2027 to cope with the datacentre community's growing demand for power.

At the same time, the Irish government has set itself a target of having at least 70% of the country's energy derived from renewable sources by 2030, yet many of the datacentres that are in operation, planned or in the process of being built will be powered by non-renewable natural gas.

"Most of the providers that are building out today are doing it with gas generation because it's something Ireland does have, but that is non-renewable," says Madsen-Jones. "So that is not going to work long-term [for the datacentre sector] because of the pretty aggressive renewable energy agenda the government has."

Environmental engineer Allan Daly,whose fervent objecting to Apple's plans to build a datacentre in Athenry, County Galway, ledtothe tech giant pulling the plug on the project in 2019, says the problems Dublin is facing now have been "foreseeable since at least 2015".

"The only possible way to power all of Ireland's proposed datacentres would be to build one or two new baseload natural gas-fired power plants," Daly tells Computer Weekly.

Meanwhile, the country's efforts to bolster its green power generation capabilities are already struggling, says Daly, citing the fact that Ireland had to pay50m to Denmark and Estonia in November 2020 for a "statistical transfer"of renewable energy after failing to generate enough green power itself.

"Ireland failed to make its overall target [for the year] by 3% and was forced to pay [that money] at the 11th hour to avoid infringement penalties from the European Commission," he says. "That's money that could have been spent on grid upgrades, renewable energy supports or even grid connections for datacentres."

Power pressure building in other datacentre hubs

Dublin is far from being the only major datacentre hub that has come up against power supply constraints when trying to meet the server farm capacity demands of the hyperscale and colocation community.

Amsterdam has run into well-documented issues of its own,resulting in the government pushing through a year-long ban on all new datacentre builds in 2019, and the growth of the Frankfurt market has been dampened somewhat by the high cost of acquiring sites and power in that region.

This has led to calls for datacentre developers to broaden their horizons when searching for suitable server farm sites, and to consider building datacentres in towns and cities where power and space constraints are not such a concern.

A similar suggestion was also put forward in March 2021 by Ireland's national grid operator, EirGrid, during the launch of itsShaping our electricity futureconsultation. The initiative set out several prospective approaches to ensuring the country reaches its renewable energy goals.

These include a policy that would allow the Irish government to dictate where large energy users, including datacentres, should locate their businesses, which could potentially see datacentres sited away from areas where power supplies are known to be scarce.

The outcome of the consultation is set to be made public in autumn 2021, so it remains to be seen if that proposal will come to pass.

Calls for datacentre building ban

The Irish government has found itself under pressure from socialist opposition party People Before Profit to reform Ireland's planning laws out of concern that the levels of datacentre growth in the country are getting out of control.

The party has called for the government to repeal the decision to fast-track datacentre planning applications to ensure the country's planning laws align with its pledge to ensure 70% of Ireland's energy comes from renewable sources by 2030.

In the meantime, a separate month-long consultation by the Irish Commission for Regulation of Utilities (CRU) was launched in June 2021. It set out a series of suggestions about how to safeguard the country's energy supplies to guard against rolling blackouts in years to come, while also continuing to meet the power demands of consumers and datacentre operators.

The accompanying 29-page consultation CRU report reinforces the reasons why intervention is needed now, highlighting figures that show a single datacentre requiring an electricity load of 60MVA is the equivalent of a "large town/small city" being connected to the grid.

"Over the last four years, EirGrid has seen annual increases in demand usage of around 600GWh from datacentres alone - equivalent to the addition of 140,000 households to the power system each year," says the consultation document.

"In the absence of datacentres, Ireland would be experiencing much more modest electricity demand growth, consistent with population growth, general economic development and the general development of industrial demand."

To address the situation, the consultation document says the CRU could introduce a moratorium that would ban datacentre operators from adding further facilities to the grid for an unspecified number of years.

Looking beyond the traditional hubs

It is common for hyperscalers to copy each other in moving into a new market, such as the burgeoning hyperscale datacentre hub of Sweden. Like Dublin, its growth has been fuelled by the government-backed marketing efforts of organisations such as Business Sweden, which have promoted the country as a prime location for datacentre development; and the Node Pole, an entity focused on getting energy-intensive industries, including battery manufacturers and datacentre operators, to invest in Sweden.

Facebook opened the first of three Swedish datacentres it now operates in Lule back in 2013. Since then, Microsoft and Amazon Web Services (AWS) have built hyperscale facilities in the country, and Google has recently secured environmental permits to follow suit as well. As is the case for other Nordic countries, one of Sweden's major selling points is the fact that the country's energy mix is predominantly green, which is a huge lure for the increasingly environmentally conscious public cloud giants.

The country is also sparsely populated, with plenty of space for the "land and expand" datacentre growth strategies favoured by the hyperscale community.

There are certain non-negotiable, data protection and latency-related reasons why enterprises and hyperscalers have historically shown a preference for having a datacentre presence in Frankfurt, Dublin, Amsterdam, London or Paris.

This means that a wholesale lift and shift of their datacentre operations to the Nordics might not be possible for some enterprises, but there could be scope for companies to migrate their less business-critical workloads to the region, says Svanberg. This, in turn, could provide a workaround for companies whose cloud and colocation partners are coming up against power and space issues in other European datacentre hubs.

What the future holds for the Irish market

Looking ahead, Madsen-Jones says she anticipates that, irrespective of how the CRU and EirGrid consultations conclude, the expansion plans of Ireland's datacentre operators will inevitably come under closer scrutiny than ever before.

"I know EirGrid is concerned with wanting to make sure that energy is not just being procured for possible projects, but it's being procured for things that are actually going to go ahead," she says.

"And there may be a point down the line when the government has to look at what these datacentres are being used for as well and see where the benefits lie in letting these projects proceed."

Despite the challenges facing the Dublin market, CBRE's data suggests the looming threat of building bans and changes to the way access to the grid is procured are - as yet - proving to be little deterrent to the hyperscale players' development plans.

"There is still a high amount of activity across the market," says Madsen-Jones. "And I don't think it has deterred customers because the hyperscalers are still showing a propensity for building out datacentres."

However, questions remain about how many of the planned builds that have been announced to date will come to fruition, she adds. "If we look at everything that's been announced, the market could have close to 800MW of supply by the end of 2024, and just under 1,200MW of supply by the end of 2026," she says.

"That's a huge amount of development, but we think just under 600MW of that 2026 figure is highly speculative, because it includes sites that don't have planning or power [grid connections] yet."

With Europe's other datacentre hubs facing similar power and planning challenges, it is fair to assume that governments and policy-makers around the world will be watching how the situation resolves itself in Dublin with keen interest, says Madsen-Jones. "There will be many governments starting to take note of the challenges Dublin is facing."

But it will also be interesting to note how the hyperscalers respond to any changes that curtail their ability to grow through the introduction of energy permitting and planning reforms in Dublin, she points out.

"Something else these governments are going to have to keep in mind as well is what the impact will be if they deny Microsoft or AWS the chance to expand," she says. "Will it affect the cost of the services they offer, because they have to be delivered from another market? Or will it slow down the move by enterprises to the cloud or to become more efficient? There is going to be a bit of push and pull."

QUESTIONS

Build a set of scenarios for the future of the IT systems described in the case study. Your analysis should look beyond the present situation and consider a wide range of alternative future scenarios over a suitable timescale. You should do this using

a) a focus and timescales for the scenarios

b) a set of driving forces using the STEEPLE categories

Socio-cultural force:

Technological force:

Economic force:

Environmental force:

Political force:

Legal force:

Ethical force: