The long-awaited proposed decision by the Commission for Regulation of Utilities (CRU) on the connection of new data centres to the electricity grid was published on Tuesday 18 February 2025. Although the proposed decision is entitled “Large Energy Users connection policy”, it is in fact directed exclusively to data centres, as opposed to all large energy users (LEUs). The proposed decision paper sets out conditions for new data centres seeking to connect to the electricity network in advance of the potential development of an enduring plan-led approach. It was drafted following an extensive consultation process in the first quarter of 2024 and in the context of an on-going moratorium on the connection of new data centres in the Greater Dublin Area.
The main elements of the CRU’s proposed decisions are:
The policy applies to all data centres seeking to connect to the electricity network. It does not apply to connections to the gas network, and the CRU acknowledges that further policy analysis and work will be required on gas connections going forward.
Data centres connecting to the electricity network will be required to provide dispatchable (i.e. available when it is needed by the system) generation or storage, either onsite or nearby, which is greater than or equal to their electricity demand. This dispatchable generation will be required to participate in the single electricity market.
In its consultation paper back in January 2024, the CRU consulted upon the potential option of requiring data centres to take such actions as would be required to deliver net zero emissions operations at the time of connection. However, after taking legal advice, the CRU has concluded that current provisions under the Climate Action and Low Carbon Development Act 2015, do not provide a sufficient legal basis to allow the CRU to explicitly mandate specific emissions reduction and offsetting measures. Instead, the CRU intends to take more limited actions in respect of emissions, such as to require regular reporting on renewable energy use and emissions by data centres to system operators (see below). In addition, when it comes to the location of future data centres, the CRU has reiterated its view there is merit in locating new data centres close to renewable generation and storage (e.g. in energy parks).
The ramping up of a new data centre’s demand will be linked to the availability and performance of its required dispatchable generation capacity. In addition, if the performance of the dispatchable generation falls below a certain threshold (which will be set out in the data centre’s electricity connection agreement), the System Operators (i.e. EirGrid and ESB Networks) will have discretion to reduce the amount of electricity the data centre can import from the electricity grid.
The System Operators are required to continue to take into account the location of any data centres (and associated dispatchable generation) in respect of whether it is in a constrained region of the electricity network (e.g. the Greater Dublin Area). The System Operators will also be required to publish regular up to date locational information (existing and outlook) in relation to the availability of capacity on the network and network constraint.
Data centres will be required to self-report to the System Operators annually in relation to their use of renewable energy (directly or through Corporate Power Purchase Agreements) and their sites’ carbon emissions. A summary of these reports will be published by the System Operators.
While demand flexibility (i.e. the ability to provide primary energy service flexibility, whether dispatch down or dispatch up) is not a specific requirement in the proposed decision, the System Operators can require demand flexibility from data centres on a case-by-case basis.
Responses are invited from interested parties on this proposed decision until close of business on Friday, 4 April 2025. The feedback from the proposed decision will inform a decision to be published by the CRU later in 2025.
Conclusion:
While the CRU's proposed decision is to be welcomed, undoubtedly many commentators will criticise the CRU for not going further by requiring all new data centres to transition to net-zero by using renewable energy rather than fossil fuels. Clearly the CRU feels it does not have the legal power to take this step. It will be interesting to see whether the CRU maintains this position in the final decision, particularly if the Supreme Court upholds Mr Justice Humphreys' recent landmark judgement on the obligations imposed on public bodies under section 15 of the Climate Action and Low Carbon Development Act, 2015 in Coolglass Wind Farm Limited v An Bord Pleanála [2025] IEHC 1.
For more information, please contact Ainsley Heffernan or your usual Beauchamps contact.
