Data Centres Boost Local Authority Revenue by €62.5 Million

Data centre operators in Ireland are significantly bolstering local authority budgets, contributing an estimated €62.5 million annually through commercial rates. This finding stems from an investigation by The Journal Investigates, which analyzed over 25 years of planning records alongside property valuations from state agency Tailte Éireann. The study highlights the substantial financial impact data centres have on local councils, enabling them to fund essential services such as housing, environmental initiatives, and community programs.

Local councils establish their commercial rates annually, which are calculated by multiplying property valuations provided by Tailte Éireann. The resulting figures underscore how vital data centres are as sources of revenue for local authorities. The income generated not only supports local services but also contributes to corporation tax receipts for the national government.

Distribution of Revenue Across Councils

The investigation reveals that three local authorities—South Dublin County Council, Fingal County Council, and Dublin City Council—collect the majority of commercial rates from data centres. This is largely due to the concentration of Ireland’s 89 data centres in industrial estates near Dublin. Notably, South Dublin County Council alone receives over half of all commercial rates generated by data centre operators, with significant contributions from a cluster in Clondalkin that includes facilities from major tech companies like Microsoft, Amazon, and Google.

A spokesperson for South Dublin County Council expressed that “data centres make an important contribution towards the funding of the local authority,” enabling the provision of essential services to the community. Similarly, Fingal County Council noted that income from commercial rates enhances the quality of life in local areas.

In contrast, while some councils see minimal income from data centres, others depend heavily on it. For instance, approximately 20% of South Dublin’s commercial rates income is anticipated to come from data centres by 2025, while in Meath, this figure approaches 17%. The latter benefits significantly from the operations of a large Meta campus and an Amazon data centre, receiving close to €10 million in commercial rates.

Concerns Over Dependency on Data Centres

Despite the financial benefits, experts warn that increasing reliance on revenue from data centre operators could pose risks. Patrick Bresnihan, an associate professor at Maynooth University, cautions that local councils might become vulnerable should these companies choose to relocate. He urges caution, stating, “We shouldn’t be deepening our dependency on these companies,” highlighting the potential governance and sustainability issues that arise from such reliance.

Bresnihan further argues that as data centres become integral to the national electricity grid, the implications of this dependence extend beyond financial concerns. He describes this situation as “privatisation by stealth,” suggesting that the subtle shift in funding sources could limit councils’ autonomy and decision-making capabilities.

To mitigate this dependency, Bresnihan advocates for increased funding from the Exchequer, which would allow councils to reduce their reliance on commercial rates while enhancing budgets for local projects and infrastructure.

In summary, while data centres present a lucrative source of income for local authorities, the long-term implications of relying heavily on such revenue streams warrant careful consideration. As the landscape of data centre operations continues to evolve, local councils will need to navigate the balance between financial support and sustainable governance.