Data centre rollout under fire due to growing pressure on electricity grids

Governments around the world are intensifying scrutiny on the building of data centres over fears that their huge energy usage is putting excessive pressure on national climate targets and electricity grids.

Ireland, Germany, Singapore and China as well as a US county and Amsterdam in the Netherlands have introduced restrictions on new data centres in recent years to comply with more stringent environmental requirements.

The threat to new projects is highest in Ireland, a hotspot for server farms built by cloud computing companies such as Google and Microsoft, because of its low tax rate and easy access to high-capacity subsea cables through which global internet traffic is run.

A decision by the country’s energy and water regulator in 2021 to limit new data connections to the electricity grid is now having a “material impact at the ground level”, said Hiral Patel, head of sustainable and thematic research at Barclays and lead author of a report on data centres. 

Data centre operators Vantage, EdgeConneX and Equinix had permits for new projects in Dublin rejected by local authorities last year. Ireland’s data centres are set to account for 32 per cent of national electricity demand in 2026, the International Energy Agency forecast last month.

The environmental impact of data centres — huge facilities that hold the servers that create the online storage for the data of millions — has become a growing issue around the world.

Loudoun County in the US state of Virginia, and Germany have recently introduced curbs that include limiting permits for data centres in residential areas, or requiring them to contribute renewable energy to the grid and reuse waste heat.

Analysts at Barclays warn that governments have yet to take into account the effects of growing Internet use on their electricity grids, with curbs of similar “severity and frequency” expected elsewhere in coming years. 

This could put pressure on the $220bn business of data centre and cloud…