The Cost of Data Centres - Modelling the household electricity costs of Ireland's data centre sector

The data centre sector in the Republic of Ireland has expanded dramatically since 2015. As of 2023, some 22% of Irish electricity is consumed by data centres, more than all urban households combined. System operator projections estimate this could rise to 30% of total energy requirements across the Republic of Ireland by 2030.

This report seeks to model and quantify the impact on wholesale costs in the Irish Single Electricity Market (ISEM) driven by the rising scale, and constant, inflexible nature of data centre energy demand. Given Ireland's dependence on gas-fired power on the grid, the constant load of data centre electricity demand acts as a rising floor, pushing wholesale prices up the merit order curve, and setting gas as a price setter, more often than would otherwise be the case, leading to an increase in wholesale power costs for Irish households.

Using residual demand modelling, this estimates the data centre cost effect by simulating the merit order curve from the demand-side, using official EirGrid system data and ENTSO-E Transparency Platform data on ISEM wholesale prices. It estimates that the average Irish household paid €360 in their residential electricity bills, cumulatively between 2015-2023, as a result of the data centre price effect.

The report also finds that this interaction effect between gas-fired power dependency and a rising and inflexible data centre demand profile, will lead to further costs for households in the future, across a range of EirGrid data centre demand scenarios and official renewable energy development pathways.