Sinn Féin MEP Lynn Boylan has launched a report examining whether data centres are paying their fair share.
And the big question from the report? It asks whether households are being forced to pay the bill for upgrades to Ireland’s electrical grid.
The report, titled By Design, Not by Default: How Regulatory Discretion Socialises the Cost of Data-Centre Expansion in the EU: A Case Study of Ireland, was written by Eve Ryan, a researcher from Trinity College Dublin.
The report examines the regulatory decisions that determine how the costs of expanding and reinforcing the electricity network are allocated between data centres and other users like households.
Launching the report, Boylan explained, “this report shows how households are being put on the hook for costs associated with the enormous increase in electricity demand from data centres.
The Sinn Féin MEP said, “while data centres pay ‘connection fees’, they are not paying the full cost of the grid reinforcement that their demand requires.
Boylan further explained, “rather than ensuring the costs associated with the increased demand from data centres are fully borne by those driving that demand, the current system spreads some of those costs across the wider electricity system, including households.”
The report found that in effect, a portion of the cost of accommodating data centre expansion is covered by electricity network charges and buried in bills paid by consumers, which Boylan linked to a “secret charge.”
“This creates a situation where the cost of upgrading the grid is being borne by households, despite the demand that makes these upgrades necessary being driven by data centres,” she said.
During Boylan and her team’s research on the issue, she found that a substation was built in Castlebaggot in West Dublin, at a cost of €100 million, but with no benefit to the consumer.
Instead, all available demand from the new substation went directly to fulfilling the demands of data centres.
Boylan said the government’s stance on data centres are purely a political choice.
“There is no law or rule that’s forcing Fianna Fáil and Fine Gael to have households pay this charge,” she stated.
Pointing to the report, Boylan said there are alternatives to the current system.
“We could design a system that shows in the open how data centres are driving up costs. We could design a system that forces data centres to pay the costs associated with additional network infrastructure,” she suggested.
“Instead, the government designed a system that heaps extra costs on people who are facing the highest electricity costs in Europe, while more than 320,000 households are in arrears.”
The Dublin MEP said, “the government needs to explain why ordinary households should be forced to carry the costs of the richest companies in the world.”
In the foreword to the report, she wrote, “Ireland’s situation – where data centres are responsible for more than 23% of demand and we have the most expensive electricity in Europe – makes it an important case study in a European context.”
“As the EU launches a concerted effort to accelerate AI infrastructure, Ireland serves as a cautionary tale for how unchecked grid development can shift the financial burdens of private speculation onto the public. This report brings the hidden rules shaping these outcomes out of the shadows so they can finally be scrutinised in full view of the public.”
The report sounded a 2007-esque alarm regarding the artificial intelligence boom.
Ryan’s report warned that an AI slowdown could become a household affordability problem, without any formal bailout of a tech company.
Page 31 of the report warns that an AI slowdown could become a household affordability problem without any formal bailout of a tech company, because the cost would already be built into the bill.
The report notes that firms can cut spending or move on, but households cannot leave the network.
“That is the strongest reason to settle who carries boom-and-bust risk before any downturn: binding capacity commitments, take-or-pay terms, staged funding, recovery that begins only when capacity is used, and published rules for handling underused assets,” the report suggests.
The report further states that even the United Kingdom, who are not operating within EU guidelines, still hold data centres to a high standard and grants powers to Ofgem to hold data centres accountable and make sure that consumers are not the ones left footing the bill.