Data Centres Contribute €62.5 Million to Local Authority Budgets

Data centre operators in Ireland are significantly bolstering local authority budgets, contributing an estimated €62.5 million annually through commercial rates. This finding comes from an investigation conducted by The Journal Investigates, which analyzed planning records spanning over 25 years to map all operational data centres in Ireland. The investigation cross-referenced property valuations from the state agency Tailte Éireann to arrive at these figures.

Every year, local councils establish their commercial rates, which are applied to property valuations to determine the amount owed by data centre owners. This income is crucial for local authorities, funding essential services such as housing, environmental initiatives, transport, and community programs. The significant property values associated with large-scale data centres mean they represent a substantial revenue stream for local governments, providing both corporation tax for the national treasury and commercial rates for local councils.

Impact of Data Centres on Local Authority Funding

The investigation revealed that the bulk of commercial rates income from data centres is concentrated among three local authorities: South Dublin County Council, Fingal County Council, and Dublin City Council. The majority of Ireland’s 89 data centres are located in industrial estates on the outskirts of Dublin. South Dublin County Council, for instance, collects over half of all commercial rates paid by data centre operators, largely due to a significant cluster in Clondalkin, which houses major facilities from Microsoft, Amazon, and Google.

A spokesperson for South Dublin County Council acknowledged the importance of data centres in funding local services, stating that the council has earned a reputation for attracting large technology companies. The spokesperson noted that the revenue from commercial rates enables the council to provide “much-needed essential services to the community.”

Other notable clusters are located in industrial parks in Blanchardstown and Clonshaugh, where numerous data centres also contribute millions in commercial rates to their respective local authorities. A spokesperson from Fingal County Council emphasized that the income generated from commercial rates supports a wide range of local services and enhances the quality of life for residents.

Concerns Over Dependency on Data Centre Revenue

Despite the financial benefits, experts caution that increasing reliance on revenue from data centre operators could leave councils vulnerable. According to Patrick Bresnihan, an associate professor in the Department of Geography at Maynooth University, a growing dependency on this income raises governance and sustainability concerns. He warned that should data centre operators decide to relocate, the impact on local authorities could be severe.

Bresnihan noted that while data centres contribute significantly to local budgets, they are also becoming integral to the national electricity grid, with on-site energy plants that can supply power back to the grid. This interconnectedness could mean that councils become increasingly beholden to these companies, a situation he characterized as “privatisation by stealth.” He suggested that while this reliance may not be malicious, it creates potential leverage for data centres over local governance.

A solution to mitigate this dependency could involve increasing funding from the national Exchequer to local councils. This would allow councils to diversify their revenue sources and reduce reliance on commercial rates from data centres. A spokesperson for the Department of Housing confirmed that government grants and subsidies have increasingly surpassed commercial rates as the primary funding source for local authorities in recent years.

The investigation highlights a complex relationship between local authorities and data centre operators, balancing the financial benefits against the risks of over-dependence. As the landscape of data centre operations continues to evolve, local governments may need to reassess their strategies to ensure sustainable funding for essential services.

This investigation underscores the importance of transparency and planning in managing the growth of data centres and their impact on local communities.