The decision of the Commission for Regulation of Utilities (“CRU”) on connection to the electricity grid for data centres is available: Review of Large Energy Users Connection Policy | CRU.ie.
It follows consultation earlier this year, which we looked at here: Data centres: Key points in consultation on electricity connection policy | Arthur Cox LLP.
The policy applies exclusively to data centres seeking a connection to the electricity network. It supersedes the 2021 Direction to System Operators (“SOs”) related to data centre grid connection processing (CRU/21/124) and will apply to all new connection applications. A new direction to SOs is set out at section 6.2 of the policy.
We look at key features of the policy in this briefing.
Generation and/or storage capacity
Data centres with MIC ≥10MVA
Large data centres must provide dispatchable onsite or proximate generation and/or storage capacity that matches their Maximum Import Capacity (“MIC”), which must participate in the Single Electricity Market (“SEM”). Data centre demand sites may develop the units directly or contract with service providers.
The onsite or proximate generation must be separately connected and metered, and will need to apply for its own grid connection (under, for example ECP-GSS, which we looked at in our briefing: New Connection Policy for Onshore Generators and Storage).
The CRU considers that the proximate generation would need to be “electrically close” at a minimum, and does not see merit in defining proximate on a geographic basis. Applicants should seek to propose generation at the same node as a proposed data centre demand connection but, where this is not feasible, the applicant could propose other options to the SOs for consideration.
Multiple data centres may be able, subject to the SO’s case-by-case assessment, to develop a single proximate generator to cover their collective MIC.
Specific conditions for participation in the Capacity Remuneration Mechanism (“CRM”) would apply. The units would only be able to bid for one-year contracts, and the maximum bid volume (on a de-rated basis) would be limited to the contracted MIC of the data centre in the delivery year concerned.
De-rating information to be used to inform the sizing of onsite or proximate generation in relation to MIC will be the de-rating curve in the latest CRM T-4 capacity auction information pack available at the time of the application for planning permission for the generation and/or storage assets.
The data centre will not be permitted to operate or ramp up to its full MIC without achieving delivery of the associated onsite or proximate generation. The de-rated capacity of the generation and/or storage must at a minimum meet the ramped or enduring MIC of the site for the duration of the connection and be operational. This means it should not be bound by limited run hours outside of agreed levels of routine necessary maintenance.
Data centres will pay network charges for their energy use.
Data centres with MIC ≥1MVA and <10MVA
Smaller data centres must provide an autoproducer unit that meets 100% of the demand site’s MIC on a de-rated basis. The data centre would set up a Trading Site and be required to participate in the SEM. The CRU considers that use of behind the meter generation would allow the demand site to benefit from avoided network charges and energy payments.
The de-rated capacity of the autoproducer unit must at a minimum meet the site’s MIC for the duration of the connection and be operational.
Data centres with MIC <1MVA
Though data centres below this de minimis threshold will not be required to comply with the policy, the CRU considers that the SOs should take into account the location of requested connections for this category, as outlined further below under ‘Location’.
Renewable electricity requirement
Data centres with a MIC equal to or above 1MVA must meet at least 80% of their annual electricity demand with additional renewable electricity generated in the Republic of Ireland.
This means that data centres will need to demonstrate that they are supporting the development of new (or fully repowered) renewable generation capacity, for example through a corporate power purchase agreement with a wind or solar developer, or through directly developed renewable assets.
Data centres will have a six-year glide path from the date of the demand site’s energisation to meet this requirement. As part of their grid connection application, applicants will be required to demonstrate a credible plan on how they intend to achieve this, and to report annually on progress towards and compliance with it.
It is important to note that up to 80% of this annual renewable electricity match (derated) can be taken into account when determining the requirements for autoproduction or dispatchable onsite or proximate generation in the SEM.
Flexibility requirements
The CRU considers that the generator and/or storage or autoproducer requirements replace the earlier proposal to impose mandatory flexibility requirements on data centres.
However, if performance and availability of units fall below minimum expected reliability or provision of available capacity to the system, the SOs will reduce the MIC of the related data centre’s demand connection.
Mandatory demand curtailment
Under the Distribution System Operator’s Load Shedding Plan, in the event of a System Emergency Status (Red Alert) indicating a shortage of available electricity on the system, the Transmission System Operator can request or instruct the Distribution System Operator to request demand reduction from customers. ESB Networks can also issue Mandatory Demand Curtailment (“MDC”) instructions, which are prioritised before requests for demand reduction. MDC instructions can only be given to customers connected at 110kV and above.
The CRU indicates that data centres that comply with the autoproducer, generation and/or storage requirements will not be required to meet MDC provisions.
Location
The policy states that the SOs should take into account the location of the requested connection (including demand and onsite/proximate generation) in respect of whether it is in a constrained or unconstrained location, in considering whether a connection offer can be made.
It states that it is within the SOs remit to determine whether a connection can or cannot be accommodated based on their assessment of each application. Grid connection is regulated under EU law, which sets out specific grounds on which requests to connect to the grid can be refused.
As the policy notes, the SOs are required to publish regular up to date locational information on availability of capacity on the network and network constraint. The CRU is requiring the SOs to publish network information that will: (i) enhance transparency and accessibility of data, (ii) clearly demonstrate the impact of the implementation of network development plans, (iii) be updated frequently (quarterly, moving closer to real-time), (iv) use clear and consistent definitions throughout, and (v) provide a coordinated and integrated view of distribution and transmission system capacity. The policy includes further detail of network information the CRU expects the SOs to produce.
Pre-application stage
Where the SO is not satisfied by reference to the assessment criteria that a connection offer can be made to an applicant consistent with the needs of the electricity system, the application will not be processed by the SO. Instead, the application will terminate.
It is worth noting that refusal of an offer triggers certain entitlements under EU law and the Electricity Regulation Act 1999 and the CRU has to an extent referenced these when it states that the relevant SO should provide sufficient detail to the applicant on why this outcome occurred, and reasons provided shall be based on objective and justified criteria.
Fault ride through
The CRU indicates that EirGrid is engaging with stakeholders to develop Grid Code standards, including fault ride-through capability, which will be transposed to the Distribution Code. It states that consideration should be given to potential requirements, where known, in the project development stage.
Gas connections
The CRU has not introduced new measures for gas connections at this stage but will consult on interruptible gas capacity products in the near term. However, it notes Government policy that ‘islanded’ data centre developments, that are not connected to the electricity grid and powered mainly by on-site fossil fuel generation, are not in line with national policy.
Next steps
By 31 March 2026, the SOs must publish an engagement and connection process for data centre applicants, to include minimum expected performance and availability requirements for generation/storage or autoproducer units.
The SOs must also provide initial proposals to the CRU in relation to publication of network information requirements in line with the requirements in the policy and EU law. By 31 March 2026, the SOs are to provide initial proposals to the CRU, including on interaction between the transmission and distribution systems.
SOs will also need to update the relevant contractual requirements. SOs will be required to provide a bi-annual report to the CRU on the implementation and effectiveness of this policy.
The CRU also indicates that a framework on flexible connections, which were required to be transposed by 17 January 2025, will be developed in due course.
The CRU flags that, in the longer-term, the scale of potential LEU development requires a State-led approach encompassing spatial planning, targets-based and plan-led infrastructure development, as well as synergies between environmental and enterprise policy. It indicates that the electricity and gas SOs are carrying out a data centre market intelligence exercise, with initial feedback suggesting there is potential for 5.8GW additional demand capacity in the data centre sector in the medium term.
It is appropriate to recognise that the key requirements in the policy are more appropriately dealt with through Government spatial planning rather than grid connection procedures but, for the moment, the new policy potentially provides a pathway for development in both the digital infrastructure and renewable energy sectors.