I move: ""That the Bill be now read a Second Time."
Is lá mór bróid dom é an lá seo mar tá mo chéad phíosa reachtaíochta tar éis an Dara Céim a bhaint amach. Táim ag tnúth leis an díospóireacht. Tá súil agam go mbeidh sé go maith agus fiúntach, agus go dtabharfaidh an tAire Stáit a thacaíocht don Bhille.
This is the first Bill I have introduced. Its Title continues the long Labour Party tradition of snappy marketing. The Title may be technical but the Bill itself is neat. It is designed to fix a gap in our law and do some good.
The Minister of State is aware of my position on data centres. My Labour Party colleagues have repeatedly made clear our view that there should be a moratorium on new data centre construction until we can be sure they will not impact on our ability to meet our climate targets and will no longer push up household energy bills. However, that is not the Government's position. The Bill is very much an attempt to work constructively with the Government on data centre policy. It presents a pretty straightforward proposition that if the Government insists on continuing to connect new very large users of electricity to the national grid, we must ensure those connections are consistent with Ireland's climate objectives and do not place an unfair burden on ordinary households and our electricity system as a whole.
My Bill would amend the Electricity Regulation Act 1999 to give the Commission for Regulation of Utilities, CRU, the power to make climate-related requirements a condition of connection to, or use of, our transmission and distribution systems. In particular, the CRU would be able to require applicants to take specified measures to avoid, prevent, reduce, offset or abate greenhouse gas emissions or otherwise advance the national climate objective. The idea for the Bill came about when the CRU published its draft large energy users connection policy last year.
There were some positive proposals, particularly the requirement that data centres would have to generate electricity equal to their own maximum import capacity. If they take a megawatt, they must be able to produce a megawatt to return to the grid. That proposal has subsequently been included in the final decision, which is very much a welcome development. However, at the time the CRU published its draft decision, there was nothing said about how the electricity should be generated. No guardrails were proposed against the use of fossil fuels. My concern was that we would simply see data centres building new gas plants on site and locking in more carbon emissions at the very moment we need to be phasing out gas. Obviously, that is less than ideal from a climate perspective and also from an energy affordability perspective in terms of the price effect that our existing reliance on gas is already having.
The CRU was asked at the time why it was not considering a renewable requirement. Its response, in essence, was that it did not have the power to do that. Under the Climate Action and Low Carbon Development Act 2015, public bodies must, insofar as practicable, act in line with the national climate objective. However, the Act frames that objective fairly broadly. The CRU's view was that the Act did not give it the explicit authority to mandate specific emission reductions or abatement measures, such as requiring data centres to use renewable generation. I saw that as a fairly serious legislative gap that could undermine our whole climate strategy.
My Bill, in short, seeks to address that gap. The power to mandate the types of measures I have outlined is necessary for the CRU to have. For new data centres in particular, the logical application of that principle is that their electricity demand should ultimately be matched entirely by additional renewable electricity. In its final decision on new connections, the CRU instituted a requirement that data centres would have to source 80% of their maximum import capacity from renewables within six years of connecting to the grid. I do not believe that is sufficient. One fifth of the massive amount of energy that data centres consume is a huge amount of new fossil fuel demand. Professor Hannah Daly of UCC has done some great work on explaining the issues with the CRU rules. When energy demand is rising so rapidly in Ireland, largely due to the enormous growth in the data centre sector, we could see a situation where we deploy more and more renewables but, at the same time, our emissions continue to rise. Big gas generators can be seen when driving past any of the data centres on the M50. Fossil fuels will continue to provide power to data centres when renewable generation is unavailable.
The CRU's six-year glide path or period of doing absolutely nothing also presents a problem. First, there are no clearly defined interim milestones required from data centres over that time, such as a requirement, for example, to reach 50% renewables within three years. There is not even any need for them to count their emissions over the six-year period. Even more important is that the emissions that build up over those six years are not just cancelled out by data centres providing or procuring renewable energy in later years. Those emissions are cumulative and irreversible. This policy basically means that data centres currently being developed could potentially rely substantially on fossil fuel generation well into the 2030s.
It is also worth noting that the 80% renewables requirement is measured on an annual basis rather than requiring renewable generation to match demand at the time it occurs. This is important because wind and solar generation levels vary depending on the time of day and the weather. By contrast, data centre energy demand is hugely inflexible and requires a highly reliable electricity supply around the clock. A company could satisfy an annual renewable energy requirement while still relying on fossil fuel generation for significant periods when wind and solar output is low.
That distinction matters. Ireland's electricity system already faces constraints in integrating increasing amounts of renewable generation. Network limitations, limited storage and interconnection constraints can prevent renewable electricity from being available exactly where and when demand occurs. Fossil fuels fill that gap. Without additional investment in the infrastructure needed to balance supply and demand, an annual renewable target does not necessarily translate into equivalent reductions in fossil fuel generation. By allowing that 20% fossil fuel generation, we risk creating a situation where the policy designed to manage the electricity system impacts of data centres will simultaneously encourage investment in new fossil fuel infrastructure.
Such infrastructure could operate for decades, potentially creating precisely the kind of fossil fuel lock-in that climate policy should seek to avoid. We are seeing that already with this Government's proposal to build a floating LNG reserve on the Shannon. This is designed to serve the needs of large energy users.
Last year, data centres accounted for 23% - almost one quarter - of our energy consumption. Over the next few years, that figure will hit 30%. They will soon be using more energy than every household in the country combined. Remarkably, data centres accounted for 88.2% of the increase in Ireland's electricity demand since 2015. Energy demand from data centres has grown an average of 22.6% per year versus 0.4% for all other sectors of our economy. That seems crazy. Data centres are the defining force shaping Ireland's electricity system, an entire system increasingly organised around the demands of a small number of large corporate users and their interests. Even if we forget about the climate impact, the unfettered growth in data centre energy demand is hitting ordinary households in the pocket.
The issues here are twofold. First, there is the enormous stress that the level of energy demand coming from data centres is having on our grid, which is struggling to keep up. For that reason, the Government is now investing billions of euro in upgrading the grid, as well as in new sustainable power generation and additional gas-fired capacity. A confidential memo from the Secretary General of the Department of public expenditure put it plainly: soaring demand, overwhelmingly attributable to data centres, is driving the need for new generation and grid reinforcement. It is not as if data centres will be paying for these upgrades. It will be households who are already put to the pin of their collars who will be footing the bill through higher network tariffs.
I point the Minister of State in the direction of a report released this week and commissioned by Lynn Boylan MEP. It looks at the ways in which the cost of the grid investment required to facilitate the ever-growing demands of data centres and other large energy users are socialised across the public. The fact that this is by design is reflected in the title of the report. I quoted a figure of 88.2%. Data centres are responsible for 88.2% of the growth in our energy demand over the past decade. They almost certainly have not paid for the equivalent share in grid investment. They absolutely have not. There is a line in the report that I think perfectly encapsulates the situation. It states that the grid becomes a publicly funded platform for private growth. Households are paying for the infrastructure that keeps data centres running and allows for the continued rapid growth in their energy consumption, in effect subsidising the demands of multinational tech giants
The second aspect is the actual price effect that data centre energy demands are having. Trying to concisely explain how energy markets work is a fool's errand, but for the benefit of the record I will give it a shot. Electricity prices function on a system of marginal pricing. The cheapest available electricity source is chosen first by operators to meet demand. Typically, the cheapest energy is renewable. When that is insufficient to meet demand, the next-cheapest source is chosen, and this continues until there is sufficient electricity to meet demand. Crucially, the last source to enter the market, which is the most expensive and is typically gas, sets the wholesale price for all other energy sources in the mix. In effect, when electricity demand is low, renewables can set the wholesale price and energy is cheap. However, when demand is high, gas sets the price and energy becomes more expensive. The thing to consider is that data centre energy demand is remarkably inflexible. It is there all the time. Unlike households or small businesses, data centre power consumption does not fluctuate throughout the day. Where households consume power together during peak periods of the day, such as when making dinner or doing the washing in the evening, data centres' demand profile acts as a rising floor, raising the level of peak demand higher than it would otherwise be and making gas the price-setter more often. Likewise, even during periods of low energy demand from households or other industries, data centres' constant need for energy creates a floor. The inflexibly high level of data centre energy consumption pushes demand above the level of cheap renewable energy more often and, therefore, gas sets the price more often.
The impact this has had on household bills was laid out in a report by Friends of the Earth earlier this year. The price is €715 million. That is the price that data centres put on Irish households between 2015 and 2023. It amounts to approximately €360 per household, or in other words, a week's wages for low-income earners. It is anticipated that under a high-demand growth scenario, which on the current trajectory is the likely scenario, data centres could add a further €1.5 billion to household bills over the next decade. This is at a time when more than 500,000 energy accounts are in arrears. To add insult to injury, data centres are paying less for their electricity than ordinary household users. That is why we in the Labour Party and others have said that we need a levy on data centres' energy use. It is deeply unfair that while data centre operators are getting cut-price deals, hard-working families and households are paying through their noses.
I know that the Government's point is that data centres are an integral part of our industrial strategy and we cannot do anything to upset the tech companies lest they take their business elsewhere. I do not dispute that data centres and the tech sector more broadly are a vital part of our economy. Data centres are a fact of modern life and enable the digital infrastructure that is more or less indispensable to properly participate in society these days. No one is arguing that. Our issue is with the scale of the growth we are seeing now, particularly with these new proposed hyper-scale data centres used for AI. Not only does the Government appear to have no appreciation of the costs associated with this growth, whether those are costs to our environment or people, it has actively been trying to hide those costs. The report on data centres that was commissioned by the Department of enterprise was, frankly, an embarrassment. Not alone did the Government attempt to grossly exaggerate the number of jobs that data centres provide for Ireland, we know from freedom of information requests that the Government explicitly instructed KPMG to remove sections of the report that highlighted the costs associated with the massive concentration of data centres here. Why is the Government so afraid of having this conversation and doing a genuine cost-benefit analysis of the expansion of data centres in Ireland? Is it because those elements of the report which were excluded from the final copy, on the explicit instruction of the Department of enterprise, drew into question the continued green-lighting of more and more data centres and whether the resources required would be better directed in addressing public services such as housing and transport? All mention of housing was cut from the final report and, particularly relevant for this debate, so too was any question raised around sustainability and energy considerations. Clearly, it was not a genuine attempt by the Government to examine the evidence and formulate policy on that evidence. It was the opposite. The Government had its policy and was looking for ways to justify it, ignoring any potential drawbacks in the process.
I will go back again to my Bill and my motivation for bringing it forward. I have fundamental issues with the Government's approach but acknowledge the role that data centres play in modern life. I acknowledge our over-reliance on ICT as a tax base. This is an attempt to work with the Government. If we continue to allow data centres to develop at the current rate, even accounting for the new connection policy, we will see fossil fuel demand continue and emissions from the sector rise and rise.
