The Commission for Regulation of Utilities (the CRU) has published the eagerly awaited Proposed Decision Paper on Large Energy Users Connection Policy (the Proposed Decision). The Proposed Decision can be found here.
The review of Large Energy Users (LEUs) connection policy was initiated in June 2023 and sought to establish a pathway to allow for continued connection of large energy users to Ireland’s electricity grid, while also balancing Ireland’s climate objectives, security of supply and continued economic growth.
There are a number of key features of the CRU’s Proposed Decision.
- Data Centres only: The Proposed Decision relates exclusively to data centres seeking connection to the electricity grid and will not apply to other categories of LEUs.
- Location: The location of the proposed Data Centre and associated generation must be taken into account as to whether it is in a constrained or unconstrained area. The CRU also notes the merits of locating Data Centres close to renewable generation and storage. Energy parks and clusters are cited as a more efficient use of electricity infrastructure.
- Onsite / proximate generation:
- Applicants need to provide dispatchable generation or storage (onsite or proximate) which matches the import capacity of the Data Centre.
- The generation must participate in the wholesale electricity market (this can include the Capacity Market) in order to avoid flexible demand arrangements being implemented.
- Data Centre ramp rates will match the connection of onsite / proximate generation (taking into account de-rating factors).
- Demand flexibility: The CRU will not implement mandatory demand flexibility requirements unless required at local system level. There are certain economic incentives provided for in the Proposed Decision to encourage Data Centres to provide demand flexibility to the grid.
- Mandatory self-reporting requirements: The Proposed Decision requires mandatory reporting by Data Centres in relation to the use of renewable energy (including under CPPAs), emissions and planned measures to move to zero emissions. Reporting requirements will be further developed in advance of the final decision. Reporting requirements are likely to be included in grid connection agreements as contractual obligations.
- System Operator reporting: The System Operators will be required to publish regular information on existing and future grid connection capacity.
- Repowering: The CRU alludes to the potential for repowering of renewables to count towards additional indigenous energy where developers could increase the overall capacity of their sites to support additionality of renewables. The CRU states that repowering of renewables could include wind farms at the end of their REFIT / RESS support contract.
- Evolution of policy: The Proposed Decision alludes to potential future policy evolutions including the introduction of strategic developments / spatial strategies for LEUs (a plan led approach) and the move towards real-time requirements for net zero energy use.
- Gas connection policy: Whilst the importance of gas connection policy for Data Centre development is recognised in the Proposed Decision, it does not introduce any decisions relating to gas connections as part of this proposed policy decision.
The CRU invites comments from interested parties on the Proposed Decision until Friday 4 April 2025. Following a final decision, the CRU will issue a direction to the System Operators (EirGrid and ESBN) regarding the assessment of data centre grid connection applications.
There is no doubt that the Proposed Decision will garner significant interest from Data Centre developers and stakeholders across the Irish energy sector.
For more information please contact John Dallas, partner, Aisling O’Donoghue, senior associate, Robbie Nicholas, senior associate, Joanne O'Neill, solicitor, or a member of the Energy, Infrastructure & Natural Resources team.
Date published: 19 February 2025
