Data Centres Contribute €62.5 Million Annually to Local Councils

Data centre operators in Ireland are providing a substantial financial boost to local councils, generating an estimated €62.5 million annually through commercial rates. This figure, compiled from recent investigations, highlights the significant role these facilities play in local authority budgets, enabling funding for essential community services.

The investigation, conducted by The Journal Investigates, mapped the operational data centres across Ireland using over 25 years of planning records. By cross-referencing this information with property valuations from the state agency Tailte Éireann, researchers were able to estimate the commercial rates collected by local authorities. These rates are calculated annually, with each council setting its own based on property valuations, ultimately providing essential revenue for services such as housing, environmental management, and transport.

Data centres, due to their large-scale operations, typically command high property values, making them vital sources of income for local governments. This revenue stream not only aids in funding local projects but also contributes to national corporation tax receipts. Despite the apparent benefits, some experts caution against over-reliance on this income, warning that it may leave councils vulnerable should the operators choose to relocate.

Predominance of Dublin Councils in Rates Collection

Three local authorities dominate the commercial rates income from data centres: South Dublin County Council, Fingal County Council, and Dublin City Council. The majority of Ireland’s 89 data centres are situated in industrial estates surrounding the capital. Notably, South Dublin County Council receives more than half of all commercial rates paid by data centre operators, largely due to a significant cluster in Clondalkin, home to major players such as Microsoft, Amazon, and Google.

A spokesperson for South Dublin County Council remarked that data centres are crucial for funding local authority services, reinforcing the area’s reputation for attracting large technology firms. The commercial rates collected enable the council to deliver essential services to the community. Similarly, Fingal County Council emphasized the importance of income from data centres, stating that it contributes significantly to a wide range of local services.

Meath County Council, while not located in Dublin, also benefits from substantial income, receiving nearly €10 million annually from a large Meta campus in Clonee and an Amazon data centre near Drogheda. According to a council spokesperson, this revenue is vital for maintaining and enhancing local services, particularly environmental initiatives.

Concerns Over Dependency on Data Centres

While many councils see data centres as lucrative revenue sources, the financial dependency on these operators raises concerns. For instance, projections indicate that approximately one-fifth of South Dublin County Council’s commercial rates income will come from data centres by 2025. In Meath, this figure is projected at around 17%.

Patrick Bresnihan, an associate professor at Maynooth University, highlighted the risks associated with this dependency, suggesting that councils could find themselves at the mercy of data centre operators. With these facilities increasingly integrated into the national electricity grid, Bresnihan warned that the growing reliance on their income could lead to what he terms “privatisation by stealth.” He advocates for a diversification of funding sources, suggesting that increased government support could mitigate reliance on commercial rates from data centres.

The Department of Housing has acknowledged that local authorities derive income from various sources, including commercial rates. A spokesperson noted that government grants and subsidies have recently surpassed commercial rates as the primary funding source for local councils, illustrating a shift in financing models.

This investigation underscores the complex dynamics between local councils and data centre operators in Ireland, revealing both the financial benefits and the potential vulnerabilities inherent in such economic relationships.