Ireland is facing a data center infrastructure crisis sooner, and more acutely, than other nations. Its data center fleet consumes approximately 600 MW — modest against the gigawatt demands of AI training and inference complexes — but this sits within a grid with a total peak demand of 6 GW, (around 10% of Texas and 1% of US demand) and an average demand of around 4 GW. Data centers in Ireland consume more than 20% of the energy supplied on its grid.

Rapid data center growth is affecting electricity prices, straining grids, and sparking public opposition around the world. Ireland has already set out a response, which is an early indicator of one way that regulators may respond to protect consumers from the impacts of large loads — and to ensure those loads shoulder some responsibility for grid stability.

Data center operators and transmission system operators (TSOs) have increasingly been looking toward on-site power as a means to solve the challenges of insufficient power generation and distribution capacity, as well as extended connection queues.

On-site power creates other issues, however, including integration of the on-site power system as a primary grid resource, the provision of ancillary services (including voltage/frequency control and stabilization) and participation in demand response programs. In many jurisdictions, data centers will become active grid participants with responsibilities to balance supply and demand and maintain system stability.

Regulatory actions

Ireland's energy and water regulator, the Commission for Regulation of Utilities (CRU), has taken an assertive approach to engage data center facilities as grid assets through its recently published Large Energy Users Connection Policy.

All new data center projects in Ireland must provide dispatchable generation equivalent to their demand (see Ireland's new grid rules signal shift in data center roles). This capacity, including on-site generation capacity, must be integrated into the grid and available to support efforts to maintain stability and reliability.

Data center operators then have a 6-year window to secure additional renewable generation capacity that is sufficient to meet 80% of their annual energy demand, a requirement designed to align with Ireland's ambitious national goal to generate 80% of its electricity from renewable sources by 2030.

In more detail, the policy points are as follows.

Generate what you need

Data centers below 1 megavolt-ampere (MVA) are exempt from the requirements. Above this level, they must provide on-site or off-site dispatchable generation or storage equal (on a de-rated basis) to 100% of their maximum import capacity (MIC). This is the upper limit of the power they can draw from the grid (see Table 1).

Table 1 Generation requirements under CRU policy

The operator must permit energy sources as primary generation assets and cede operational control to Ireland's TSO EirGrid, which will operate the generation on an "as-needed" basis to balance supply and demand. This capacity can be provided by a partner organization.

The electricity generated is supplied to the Single Electricity Market (the unified electricity market operating across Ireland) at wholesale rates. The operator also receives a capacity subsidy from Ireland's Capacity Remuneration Mechanism. The operator buys its power from the grid at the market price, which includes normal network charges.

Facilities cannot start operating until their generation capacity is delivered and must continue to provide de-rated capacity equal to their MIC while the connection is operational. Multiple data centers on a campus can collaborate with the same generation/storage provider to meet the requirements.

Data centers above 10 MVA with on-site generation must provide derated capacity matching their demand, so an on-site gas generator must provide 118 MW to match 100 MVA facility load (see Figure 1)

Figure 1 Data center power generation via grid

Curtailment and control

New data center projects must install electrical system components and adopt operational practices that will enable mandatory, managed fault ride-through and reconnection processes. These are required specifically to prevent the dynamic load behavior of large AI training data centers from increasing the risk of grid failure. CRU and EirGrid will adopt other work on the subject.

In addition, data centers must participate in demand response programs to balance supply and demand during emergencies. However, those operators that have met the local generation requirement will be exempt from mandatory demand curtailment.

The local generation requirement also replaces any mandatory requirement to participate in load flexibility schemes (though CRU expects that EirGrid and electricity distribution service operator ESB Networks may offer optional schemes).

Islanded gas-powered sites will also be subject to demand control because the gas network is under stress and gas capacity may be required to support the electricity grid.

Planning and permitting

CRU affirms that EirGrid and ESB Networks will have the power to refuse applications in constrained areas. All grid connection applications must be supported by a validated planning application for the whole project, with permission granted for the generation or storage component of the project before EirGrid or ESB Networks will consider the load application. This stipulation is designed to prevent unapproved projects from creating a "zombie" queue, in which speculative projects block other fully developed projects.

The response from EirGrid and ESB Networks makes clear that the Dublin/Meath region — currently subject to an effective moratorium — will remain fully constrained. Data center power demand in this region reached 36% of local consumption in 2021, and currently stands at around 50%.

Renewable energy roadmap

In most practical situations, the dispatchable power required when operators bring a facility online will be gas-fired. Data center operators will be required to compensate for the associated emissions by purchasing new ("additional") renewable electricity generated in Ireland.

From the date the data center becomes operational, the operator must pay for an increasing amount of renewable energy through wind or solar power purchase agreements (PPAs), to match 80% of the facility's local electricity consumption by its sixth year of operation.

In the long term, operators are effectively required to pay the capital costs of bringing online generation capacity equivalent to 1.8 times their energy consumption: on-site generation to supply 100% of its consumption and on-grid renewable generation to meet 80% of its consumption. Operators will pay for the entire output of the PPA.

Aims and results

The CRU's primary aim is to leverage data centers to help resolve several challenges facing the grid:

• Capacity. The CRU requires data center operators fund all the capacity they need.
• Dispatchable power. EirGrid has control of dispatchable power.
• Decarbonization targets. Data center operators enlisted to install renewable energy.

The CRU can justify this approach because the rapid, uncontrolled expansion of data centers would exacerbate the following issues:

• Data center operators buying capacity on the market raises energy prices and creates supply delays for other sectors.
• Data centers with on-site power undercut grid prices.
• Data centers connected passively to the grid increase the need for dispatchable power.
• On-site power is predominantly carbon-intensive (gas) increasing the decarbonization "gap".

The CRU's requirements are burdensome and will be challenged on grounds of fairness and practicality. They require operators to maintain and operate a primary power generation asset without control over its revenue stream.

The renewable energy requirement will encounter severe issues. Renewable energy sources have a low capacity factor (around 30%), and new data centers will be large in comparison with the grid, creating practical issues.

A single 200 MW data center must match 80% of its yearly energy consumption, perhaps by commissioning a 600 MW wind farm. During the still summer months, the data center will use the standard grid mix of electricity, and in windy winter months, it will use wind power. However, it will only need 200 MW, so the grid will be expected to use or store 400 MW of capacity.

A single data center's surplus peak renewable energy provision would amount to 7% of peak demand, or 17% of average demand. Multiple data centers would increase this further. EirGrid is unlikely to need all this power, so it will curtail the wind farm. In this situation, does EirGrid sue the operator for missing its target; or does the operator sue EirGrid for causing it to do so; or does the operator continue operating the farm at negative power prices?

The requirement forces data center operators to implement unrealistic amounts of renewable power, effectively crowding out the market for other renewable developers. EirGrid has highlighted "conflicts" in the renewable power requirement and has requested that the CRU revisit and clarify it.

US comparison

In the US, state lawmakers and regulators are seeking to manage the grid connections of large load customers. For instance, in Texas Senate Bill 6 requires project developers to pay an upfront fee, prove their finance, and pay for all additional grid infrastructure fees (see State governments act to control power demand). The Electric Reliability Council of Texas (ERCOT) can curtail large loads to maintain grid stability. Behind the meter generation systems, and up to 50% of backup generation capacity may be required to support grid stability.

Texas Governor Greg Abbott has recently written to ERCOT and the Public Utility Commission (PUC) of Texas, instructing them to take any further actions needed to ensure that data center expansion will reduce residential electricity bills and not burden consumers with infrastructure costs incurred by data centers.

The Federal Energy Regulatory Commission has instructed the six US regional transmission organizations to connect data centers to the transmission network more promptly and to make any changes to rules to ensure that infrastructure costs and grid stability are handled fairly.