Households must not foot the bill for data centre expansion – Pa Daly TD

Sinn Féin spokesperson on Energy, Pa Daly TD has called on the government and the regulator to urgently review the practice whereby households are effectively subsiding data centres, leading to payments of hundreds of millions a euro a year.

He argued that ordinary workers and families should in no way be expected to pay for data centre expansion through higher energy bills.

Commenting on the recent investigation by the Sunday independent, the Kerry TD said:

“There is deep unfairness at the heart of the Irish energy market. Ordinary workers and families are expected to shoulder a disproportionate burden meanwhile large energy companies make off into the sunset with eye-watering profits.

“This weekend, we learned that prices are set to rise even further following the recent decision by CRU and government to facilitate data centre expansion.

“The reason for this is because additional data centres will lead to increases in what are called capacity payments.

“Households already effectively subsidise data centres by hundreds of millions of euro every year through these payments.

“Ordinary workers and families are already paying the 2nd highest electricity prices in Europe. Without urgent energy market reform, new data centres will inevitably push these prices up even further.

“The upward pressure data centres put on energy bills is due to their impact on Ireland’s energy demands, in particular peak gas demand which is when the least efficient and most expensive gas fuelled suppliers are needed

“Data centres already guzzle up more than a fifth of all electricity nationwide and have risen more than 20% a year since 2015. Astoundingly, their power use is forecast to increase to 31% by 2032, according to research by University College Cork published in December.

“The cost of this unfettered and unsustainable growth is astounding and is far outpacing the roll-out of renewables.

“According to this weekend’s investigation, capacity payments to data centres have grown significantly since 2007. A different analysis points out that they have doubled since 2019 and make up a fifth of recent price rises.

“Shockingly, between 2007 and 2018 billpayers paid about €5bn, an average of €454m a year. In the last year alone, for example, there was a staggering €600 million in capacity payments awarded to or applied to by just three companies.

“On top of that, a report by UK analysts Aurora Energy Research and Beyond Fossil Fuels (BFF) found that €6bn in capacity payments were awarded for gas generation in Ireland, about €1bn a year.

“These are already eye-watering figures. However, they are set to rise even further as new data centres come online. The impact on bills will be exacerbated by the fact that many will rely on gas generation following the CRU’s ruling that they have no mandate to prevent this.

“Gas-powered energy generation is more expensive than renewable power and is vulnerable to price surges.

“The government and the energy regulator seem to be taking ordinary workers and families for fools.

“Households should not be expected to foot the bill for data centre expansion while simultaneously being ripped off with some of the highest electricity bills in Europe.”