Data Centres Contribute €62.5 Million Annually to Local Councils

Data centre operators are making a substantial contribution to local authority budgets in Ireland, generating an estimated €62.5 million annually through commercial rates. This significant revenue stream is derived from the operators’ property valuations, which local councils assess in accordance with the data provided by the state agency Tailte Éireann.

A recent investigation by The Journal Investigates has revealed insights into the financial dynamics between data centres and local authorities. Over the past 25 years, the investigation mapped all operational data centres in Ireland, shedding light on their impact on local funding. Every year, local authorities set their commercial rates, which are multiplied by property valuations to determine the total amount owed by data centre owners. This revenue is crucial for funding services such as housing, environmental management, transport, and community programs.

Dublin Councils Lead in Data Centre Revenue

The bulk of commercial rates from data centres comes from three local authorities: South Dublin County Council, Fingal County Council, and Dublin City Council. The majority of the country’s 89 data centres are located in industrial estates surrounding Dublin. Notably, South Dublin County Council receives over half of all commercial rates paid by data centres, largely due to a concentration of facilities in Clondalkin. This area is home to significant campuses operated by Microsoft, Amazon, and Google, among others.

A spokesperson for South Dublin County Council stated that data centres play a vital role in funding local authorities, contributing to essential community services. The spokesperson highlighted the council’s reputation for attracting major tech companies, which further boosts their commercial rates revenue. Other local authorities, like Fingal County Council, echoed this sentiment, noting that income from commercial rates supports a wide range of community services.

Concerns Over Revenue Dependency

While income from data centres is a boon for many councils, experts have raised concerns about the potential pitfalls of increased dependency on this revenue source. Approximately 20% of South Dublin County Council’s commercial rates income is projected to come from data centres by 2025, with Meath County Council estimating a similar figure of 17%.

Patrick Bresnihan, an associate professor at Maynooth University, cautioned against relying heavily on data centre revenues. He warned that such dependence could leave councils vulnerable if these companies decide to relocate or reduce their operations. Additionally, as data centres become increasingly integrated into the national electricity grid, the sustainability of local energy transitions may become tied to the interests of these operators.

Bresnihan described the scenario as a form of “privatisation by stealth,” where local councils might inadvertently find themselves reliant on private companies for essential funding. He suggested that increasing direct funding from the government could alleviate this dependency, allowing councils to invest in local infrastructure and services without over-reliance on commercial rates from data centres.

The investigation revealed that while data centres contribute significantly to local budgets, the exact amount received by councils may vary. Some data centres are integrated within larger manufacturing plants or classified as office space, complicating the assessment of commercial rates. As a result, the figures presented are estimates based on the best available data, and the actual income could differ.

Meath County Council, for example, receives close to €10 million from a large Meta campus in Clonee and an Amazon data centre near Drogheda. A spokesperson noted that commercial rates are a critical component of the council’s revenue, enabling them to maintain essential services across the county.

As the demand for data centres continues to grow, local authorities are faced with the challenge of balancing the benefits of increased revenue against the risks of becoming overly reliant on a single industry. The ongoing conversation among policymakers, experts, and local government officials will be crucial in shaping the future landscape of data centre operations and their impact on community funding in Ireland.