Key Contacts: Niall Donnelly – Partner | Alice Whittaker – Partner | Alison Hardiman – Consultant | John O’Donoghue – Partner | Angelyn Rowan – Partner | Kerri Crossen – Partner | Eoghan Doyle – Partner | Simon O’Neill – Partner | Max Bail – Associate |
The CRU’s Large Energy Users Connection Policy for data centres (“Decision”) is best understood as a reset of the bargain between the digital economy and the electricity system. It replaces a reactive, moratorium style approach with a structured regime under which new large data centre loads will only be accommodated where they come bundled with dispatchable, market participating capacity and substantial additional Irish renewable generation, explicitly tying future growth in the sector to security of supply and decarbonisation objectives. Following our earlier analysis of the draft decision in February 2025 (here), we consider some of the key features of the Decision and the consequences for the future of data centre development in Ireland.
Core decisions
- The Decision confirms that the new connection policy applies exclusively to data centres, defined as a distinct class of Large Energy User whose rapid, flat and geographically concentrated load profile is now acknowledged as systemically different from other industrial demand. The CRU points to the combination of a 460% increase in data centre electricity consumption over the last decade, the fact that data centres already account for around 22% of national electricity use and roughly half of metered consumption in the Dublin/Meath region, and projections that they will constitute 31% of Irish electricity demand by 2034 based on existing contracts.
- A de‑minimis threshold of 1 MVA MIC is set, below which the obligation to provide onsite or proximate generation or storage and to meet the renewable electricity requirement does not apply, although system operators may still refuse or condition connections in constrained locations. The CRU justifies this on proportionality grounds, noting that imposing dispatchable and renewables additionality obligations on sub‑1 MVA sites would likely be uneconomic and administratively onerous without materially improving security of supply.
- For data centres at or above 1 MVA but below 10 MVA, the Decision requires an autoproducer unit that, on a de‑rated basis, meets 100% of the site MIC and participates in the Single Electricity Market. The Decision recognises the associated renewable generation output, up to 80% of annual demand, as counting towards the autoproducer capacity requirement on a de‑rated basis and provides that compliant sites are exempt from mandatory demand curtailment obligations.
- For data centres at or above 10 MVA, the CRU requires dispatchable onsite or proximate generation and/or storage, separately connected and metered, with de‑rated capacity at least equal to the site’s MIC and ramped in step with demand; again, participation in the wholesale market is mandatory and compliance removes the need for separate mandatory curtailment provisions.
- A further central pillar is the renewable electricity obligation. All data centres at or above 1 MVA must meet at least 80% of their annual electricity demand with additional renewable electricity generated in the State, subject to a six‑year glide path from energisation. The CRU roots this requirement in its statutory function under section 9(1)(s) of the Electricity Regulation Act 1999 to ensure that grid connection policy takes account of renewable energy policy, and explicitly distances itself from any direct role in setting emissions caps or offsetting requirements, which it argues would go beyond its functions under the Climate Action and Low Carbon Development Act (“Climate Act”).
- Location remains a key assessment criterion. System operators must assess whether proposed demand and the associated generation are sited in constrained or unconstrained parts of the network. It is within the system operator’s remit to determine whether a connection can or cannot be accommodated based on their assessment of each application. They must also publish regular, transparent locational information on capacity and constraints across transmission and distribution, with initial proposals due by March 2026, and develop a dedicated data centre engagement and connection process by the same date.
- On enforcement, the Decision allows system operators to reduce MIC or move a data centre connection to non‑firm status where associated generation or storage does not meet specified performance and availability standards, and to terminate connection applications entirely where the assessment criteria cannot be satisfied. The new Section 34 direction reflecting this Decision will supersede the 2021 direction and applies only to applications lodged after the Decision. Existing applications continue under the 2021 framework, preserving a limited degree of regulatory continuity.
How the decision departs from the earlier draft decision
The February 2025 proposed decision framed the policy in more general terms around “onsite or proximate” dispatchable generation for all data centres, but left open key design elements now settled, such as the MIC threshold structure, the de‑minimis level and the specific form of the renewables obligation. The consultation asked whether a minimum MIC (for example 500 kW or 1 MW) should apply and did not distinguish obligations by reference to 10 MVA, whereas the final paper crystallises a 1 MVA de‑minimis and a two tier regime split at 10 MVA between autoproducer and full dispatchable generation requirements.
The proposed decision emphasised dispatchable onsite or proximate generation and self‑reporting of renewable usage and emissions, with only a high level reference to alignment with renewable energy policy, and several respondents criticised what they perceived as a shift from an emphasis on renewables additionality in the earlier consultation exercises towards a narrow focus on dispatchable capacity. In response, the final Decision introduces a concrete obligation to source 80% of annual demand from additional Irish renewable generation, coupled with a six‑year glide path, and links this explicitly to the CRU’s statutory renewable policy function rather than to emissions ceilings.
On emissions treatment, stakeholders invoked the High Court’s Coolglass judgment and argued that section 15 of the Climate Act required the CRU to incorporate climate ceilings more directly into connection policy, with some advocating for moratoria and mandatory emissions modelling for data centres. The CRU reiterates its view that the Climate Act does not expand its functions and that it cannot lawfully impose direct emissions caps or offsetting obligations via connection policy; however, the final Decision responds by tightening the renewable obligation and clarifying that the 80 per cent requirement is framed as a renewable policy measure rather than an emissions measure.
Finally, the Decision refines the location and process architecture relative to the connection assessment. Stakeholders criticised the “constrained area construct” as a de facto continuation of the Dublin moratorium and sought more granular, site‑specific assessments and clearer engagement channels. The final Decision maintains location as a hard criterion, but signals a move away from broad regional bans towards localised constraint assessment, the development of flexible connection frameworks and an obligation on system operators to publish detailed locational information and a standardised connection process by March 2026.
Supporting the energy system and decarbonisation
The Decision is set against the backdrop of the Climate Action Plan 2025 targets of up to 80% renewable electricity and 9 GW onshore wind, 8 GW solar and at least 5 GW offshore wind by 2030, alongside at least 2 GW of new flexible gas plant and 20–30 per cent demand side flexibility. It recognises that data centre demand growth has outpaced both network reinforcement and new low carbon generation, and that unconstrained data centre connections risk crowding out electrification in heat and transport while undermining sectoral emissions ceilings.
By mandating new data centres to “bring their own” capacity in two dimensions (i.e., fully‑sized dispatchable capacity and high percentage renewable supply) the regime seeks to, in principle, make the marginal impact of additional data centre load on system adequacy and emissions neutral on a long term basis (appreciating there is a 6-year glide path for the renewable energy supply). New projects must support national capacity and renewables build out rather than simply contracting into an already stretched system; the public interest justification is that this protects security of supply for households and non‑LEU industry while leveraging data centre investment to help underwrite the capital intensive build out of renewables, storage and dispatchable generation.
From a clean energy perspective, the 80% annual Irish renewables requirement, particularly if met through corporate PPAs, should also increase demand for unsubsidised renewable projects, including hybrid renewable plus storage configurations. Many hyper-scalers themselves have set more ambitious renewable energy targets, including hourly renewable energy matching and this is consistent with the direction of travel under reforms to one of the major carbon accounting standards, the Greenhouse Gas Protocol – Scope 2 Guidance. We looked at these reforms here.
Implications for Ireland Inc.
The Decision should be also viewed in a wider international pattern in which a handful of jurisdictions are grappling with rapid, geographically concentrated data centre demand and associated system risks.
Within the EU27, Ireland is already a clear outlier: the Commission’s Joint Research Centre estimates that data centres accounted for 18 per cent of national electricity use in Ireland in 2022, compared to 5.2 per cent in the Netherlands, 3 per cent in Germany and 2.2 per cent in France. Ireland also has an unusually high share of its national data centre fleet located in a single metropolitan region, with 97 per cent of Irish data centres in Dublin compared to 44 per cent of Dutch facilities in Amsterdam.
Several jurisdictions have responded to similar pressures with restrictive measures. The Netherlands has in place enduring restrictions on new hyperscale data centres with IT loads of 70 MW or more, confining them to a small number of designated sites in the north of the country, while Singapore imposed a moratorium on new data centres in 2019 and now operates a competitive “call for applications” scheme under which only highly efficient, low‑emission facilities are permitted. In Virginia’s “Data Centre Alley”, the North American Electric Reliability Corporation has highlighted the operational risks of large clusters of data centres switching en masse between grid and onsite generation, characterising emerging large loads as electrically non-conforming and difficult to plan for under traditional adequacy models.
Against that backdrop, Ireland’s model is comparatively permissive and pragmatic in that it does not impose a categorical moratorium on new data centres, but it is unusually demanding in insisting on dispatchable capacity and an 80 per cent local renewables obligation as conditions of connection. For other small or weakly meshed systems facing similar digital economy pressures, the Irish approach offers a template for shifting from pure moratoria towards conditional access predicated on additionality in both capacity and renewables, albeit at the price of significantly increasing project complexity and capital intensity for prospective operators. The insistence on market participating generation and storage also underscores an emerging regulatory norm: large flexible loads should be embedded in wholesale and capacity markets as active participants rather than treated as passive demand.
In addition, at EU level, the recast Energy Efficiency Directive and emerging sustainability reporting rules for data centres already require operators above certain thresholds to disclose energy, renewable and efficiency metrics and contribute to binding energy consumption reduction targets. The CRU’s Decision goes beyond transparency by creating binding quantitative requirements integrated into network access decisions, but its logic is aligned with EU concerns about high energy demand sectors undermining collective decarbonisation pathways.
Deliverability in practice
Whether the new framework is deliverable in practice depends on three interlocking factors: the availability of suitable renewable and dispatchable projects, the ability of the capacity market, wholesale and system services markets to remunerate new assets developed for data centre support, and the ability of the Irish planning system to consent both data centre and energy infrastructure at scale and at pace.
On the renewables side, the Decision leans heavily on the 2024 ECP GSS connection policy, which removes the annual cap on the number of projects processed and aims to accelerate connections under the enduring connection process. The CRU positions this as an enabler for the renewables additionality demanded of data centres, allowing projects backed by corporate PPAs to obtain grid access outside the RESS support framework and to co‑locate with storage to firm output. Respondents to the proposed decision highlighted that many data centre operators already target 30–50% PPA coverage and are exploring 24/7 hourly matching, suggesting that the market for sophisticated PPA structures is maturing.
However, the key challenge is likely to be the need for long‑term, large volume PPAs with projects in the Republic that can credibly reach financial close, secure consents and deliver on the six year glide path. Competition with RESS as a route to market and managing issues such as high levels of constraints and curtailments remain key considerations in assessing corporate PPAs as viable routes to market in Ireland. These external factors may impact on the data centre operator’s ability to satisfy its obligation to source a 80% renewable energy supply, with potential consequences for failure to comply including MIC reductions under the connection agreement becoming key risks for any investment or financing of a data centre project in Ireland.
On the capacity side, the requirement for de‑rated onsite or proximate generation and or storage equal to MIC, coupled with one year capacity market contracts and a cap at MIC, may constrain the bankability of pure capacity revenue streams for these assets and increases reliance on data centre backed offtake to make the project commercially viable. In practice, the capacity market rules and de‑rating factors will become critical. Developers will need confidence that assets built to satisfy data centre obligations can also earn capacity market and system services income, otherwise the cost of compliance may fall entirely on data centre lease fees or other customer fees.
Deliverability is also contingent on the planning system. Experience to date shows that large scale energy and data centre projects in Ireland face protracted planning processes, frequent appeals and, in some cases, judicial review, contributing to delays that already threaten data centre investment pipelines and renewable deployment. The Decision itself acknowledges that the core issues of data centre spatial strategy, associated grid reinforcement and the reconciliation of climate and enterprise policy require a state led spatial planning response, implicitly recognising that a connection policy cannot on its own overcome planning bottlenecks.
In practice, therefore, the requirement for parallel planning consents for data centres, dispatchable generation or storage assets, and associated renewables, all within an increasingly contested planning environment, will demand sophisticated phasing, optioning and contingency arrangements in contracts and financing structures. It will also necessitate closer coordination between project sponsors, system operators and planning authorities to ensure that locational choices align with both available grid capacity and emerging regional and national planning frameworks for energy and digital infrastructure.
Conclusion
In summary, the Decision presupposes a high degree of developer sophistication and a deep, bankable pipeline of Irish renewable and flexible assets capable of being contracted at scale. For many operators, particularly those targeting the already constrained Greater Dublin region, the combination of dispatchable capacity obligations, an 80% Irish renewables requirement and locational constraints is likely to redirect investment towards regions with more favourable grid and planning conditions and may render some marginal projects unviable. Whether this is ultimately viewed as a policy success will depend on how decisively the State delivers the parallel planning, grid and market reforms foreshadowed in the Decision. In regulatory terms, the CRU has chosen to move beyond a moratorium style approach and to embed data centres within a structured framework that seeks to balance security of supply, system decarbonisation and the digital economy, but the credibility of that framework will be tested in implementation.
