Data Centres Generate €62.5 Million Annually for Local Councils

Local councils in Ireland receive an estimated €62.5 million each year from data centre operators through commercial rates, according to a recent investigation. This revenue stream plays a crucial role in funding essential services such as housing, transport, and community programs. The Journal Investigates conducted a thorough analysis based on planning records and property valuations provided by the state agency Tailte Éireann to arrive at these figures.

The rise of data centres, particularly around Dublin, has transformed local authority budgets. Communities are increasingly reliant on the income generated from these high-value properties, but experts caution against over-dependence. Such reliance could expose councils to financial vulnerabilities if data centre operators decide to relocate or downscale their operations.

Major Contributors to Local Authority Budgets

Three local authorities dominate the commercial rates collection from data centres: South Dublin County Council, Fingal County Council, and Dublin City Council. These councils benefit significantly due to the concentration of data centres in industrial estates located on the outskirts of the capital. For instance, South Dublin County Council earns over half of all commercial rates from data centre operators, notably from a large cluster in Clondalkin, which includes facilities from major players like Microsoft, Amazon, and Google.

The Journal Investigates previously reported on the EdgeConneX campus in Clondalkin, which has recorded the highest emissions from backup generators compared to other data centres, emitting close to 130,000 tonnes of CO2 since its opening in 2017. A spokesperson for South Dublin County Council remarked that data centres contribute significantly to funding essential local services and help the council maintain a reputation for attracting major tech companies.

Fingal County Council also benefits from data centre revenues, highlighting that the income received supports a wide range of community services. Their spokesperson emphasized the importance of this financial contribution to the quality of life in the local area.

Concerns Over Financial Dependency

Despite the significant revenue generated, some councils receive very little from data centres. For example, Meath County Council reports close to €10 million from a large Meta campus and an Amazon facility near Drogheda, indicating a varying impact across different regions. Experts are raising alarms about this financial dependency, suggesting that a substantial portion of the commercial rates for South Dublin County Council—approximately one-fifth—will come from data centres by 2025. In Meath, that figure approaches 17%.

Patrick Bresnihan, an associate professor in the Department of Geography at Maynooth University, cautioned against deepening reliance on data centres for local budgets. He noted that as these facilities become more integral to the national electricity grid, councils could find themselves in a precarious position, with their funding tied to the interests of these companies. Bresnihan described this trend as “privatisation by stealth,” underscoring the potential risks of financial dependence on a single sector.

The investigation indicates that while data centre operators provide a vital source of income, the solution lies in diversifying funding sources. Increasing government funding through the Exchequer would mitigate the risks associated with over-reliance on commercial rates. A spokesperson for the Department of Housing confirmed that in recent years, government grants have surpassed commercial rates as the primary funding source for local authorities.

As councils navigate the challenges of modern funding, the balance between attracting high-value industries and ensuring sustainable growth in local economies remains critical.