The CRU Publishes its Decision on New Electricity Connection Policy for Data Centres

The Commission for Regulation of Utilities (CRU) has published its decision on a new electricity connection policy for data centres. The announcement comes after an extensive period of consultation with a diverse range of stakeholders and ongoing dialogue with relevant government departments on a proposed decision that it published in February.

Data centres are a core infrastructure enabler of a technology-rich, innovative economy, which makes Ireland a location of choice for a broad range of sectors and value-added activities. Ireland has been very successful in attracting data centre development to date, resulting in electricity demand from data centres growing from 5% of national electricity demand in 2015 to 22% in 2024.

With currently contracted demand, EirGrid has forecast that the data centre sector will continue to grow in the coming years, with electricity demand from data centres projected to increase from 9.4 TWh in 2025 to 14.6 TWh in 2034. This represents a doubling of electricity demand from data centres relative to 2023 figures. This increase in demand will result in data centre electricity demand consumption increasing from 22% of national electricity demand in 2024 to 31% by 2034.

The objective of the new policy is to provide a pathway for data centres to connect to the electricity system, which takes into account existing constraints on the grid and the pace of delivery of network capacity; security of supply and generation adequacy; and national renewable energy targets. The new policy provides a greater level of clarity to those considering investments in new digital infrastructure.

The key points to the new policy are:

• Generation requirement: New data centres connecting to the electricity network will continue to be required to provide generation and/or storage capacity, either onsite or local in proximity to match the requested data centre maximum import demand capacity. This generation will be required to participate in the wholesale electricity market to support overall system adequacy, while providing a potential revenue stream to the developer.
• Renewable Energy requirement: Data centres will be required to meet at least 80% of their annual demand with additional renewable electricity projects generating in the Republic of Ireland. To ensure additionality, renewable generation which has previously been, or is currently, contracted through existing support mechanisms (e.g. REFIT, RESS, ORESS) cannot be used to meet this requirement. Data centre developers will be allowed a 6-year glide path for renewables to be developed and start generating. This acknowledges the timelines associated with developing renewable energy projects. Data centre developers will be required to present a credible plan to System Operators (EirGrid and ESB Networks) for the development of associated renewable projects.
• Location and Constraint: The System Operators must consider whether a requested data centre connection is in a constrained or unconstrained location on the electricity network. This will require system operators to focus on the details of the specific application and its location on the electricity network instead of the current broader regional approach. The System Operators will also be required to regularly publish information in relation to the availability of capacity on the electricity network, identifying current and future constraints to provide accessible information for all stakeholders.
• Connection Process: The System Operators will be required to publish an engagement and connection process for data centre connection applicants by 31 March 2026 as part of the implementation of this policy.

The CRU is of the view that the medium to long-term development of the data centre sector in Ireland requires a State-led approach encompassing spatial planning, development targets and plan-led infrastructure development, which drives synergies between energy, environmental and enterprise policy. The CRU is fully supportive of the State in developing a plan and will continue to inform and support the State in this regard.

The link to the proposed decision can be found here on www.cru.ie.