‘Hidden datacentre tax’ costing Irish households millions, report says

Energy demand by datacentres in Ireland has added hundreds of euros to household electricity bills in a pattern that could be replicated across Europe, according to a report.Ireland’s growing number of datacentres last year used 22% of the country’s electricity, more than all urban homes combined, according to the Central Statistics Office. The equivalent figure in the US and UK is 6%.The centres have “drained” €715m (£620m) from the Irish economy and increased household bills by a cumulative average of €360 between 2015 and 2023, said the report commissioned by Ireland" class="entity-link entity-organization" data-entity-id="135949" data-entity-type="organization">Friends of the Earth Ireland and Beyond Fossil Fuels. It argued that Irish households have been subsidising big tech via a “hidden data centre tax” on their electricity bills.Jill McArdle, of Beyond Fossil Fuels, said: “The Irish case should be a warning for Europe: letting big tech expand datacentres unchecked will have massive ripple effects on the economy and European households. Combined with fossil gas, this creates a toxic mix – driving up energy prices for people already struggling through another energy crisis.”Datacentre industry representatives disputed the findings and said the sector boosted the economy.The Irish government has broadly welcomed the expansion, calling datacentres “a core enabler of our technology-rich innovation economy”, and denies they create a stealth tax on consumers.Seán Fearon, a postdoctoral researcher at the Institute of Environmental Science and Technology at the Autonomous University of Barcelona and author of the report, said: “Our modelling shows that the high, growing and inflexible nature of datacentres’ electricity demand increases the number of hours in which gas sets the price in the Irish power system, driving up electricity costs.”Historical evidence suggested this effect became more pronounced during energy shocks, with the high datacentre demand and gas dependency combining to amplify price spikes, he said.Depending on datacentre growth, the average Irish household could pay a further €295 to €644 cumulatively from 2025 to 2034, for a national total between €633m and €1.43bn, Fearon added.McArdle said the European Commission should heed Ireland’s example and strengthen safeguards amid proliferation of datacentres – in part driven by AI – across Europe.“Even Trump, under intense pressure from voters, has acknowledged that big tech should pay its own energy bills,” said McArdle. “Unless datacentres are required to be powered by additional renewable energy, they could lock Europe into volatile and expensive fossil gas.”Industry groups disputed the report, saying big energy users bought electricity in a way different from other users and were pumping money into the economy.Maurice Mortell, chair of Digital Infrastructure Ireland, said datacentre investors had injected €18bn in recent years.Tom Parlon, chair of the Irish Data Centre Supplier Alliance, said datacentres paid grid network charges and commercial electricity costs proportional to their usage and investment. Datacentres must meet 80% of energy needs from additional renewable capacity – the strictest regime in Europe – and paid the lion’s share of Ireland’s corporate tax bonanza, he said.Parlon said: “These unprecedented tax revenues allow the Irish state to invest in critical infrastructure and housing, while also funding direct supports for Irish households and climate action programmes.”