Data Centres Generate €62.5 Million for Irish Local Authorities Annually

Data centre operators are significantly bolstering local authority budgets in Ireland through commercial rates, contributing an estimated €62.5 million annually. This figure emerges from an investigation by The Journal Investigates, which analyzed over 25 years of planning records alongside property valuations supplied by the state agency Tailte Éireann. The findings reveal that the commercial rates paid by data centres are a crucial revenue source for local councils, enabling essential services such as housing, environmental management, and community programs.

The investigation highlights how local authorities establish their commercial rates based on property valuations, which are then multiplied to determine the total amount payable by property owners. The substantial property values associated with data centres make them key contributors to the financial health of local governments. As data centres gain prominence, they not only provide corporation tax revenues for the national government but also serve as lucrative income streams for local councils.

Major Contributors to Local Council Budgets

Three local authorities lead the charge in collecting commercial rates from data centres: South Dublin County Council, Fingal County Council, and Dublin City Council. The majority of Ireland’s 89 operational data centres are situated in industrial areas on the outskirts of Dublin. Notably, South Dublin County Council derives more than half of its commercial rates from data centre operators, largely due to a cluster in Clondalkin that includes major facilities from Microsoft, Amazon, and Google.

The Journal Investigates previously reported that the EdgeConneX data centre campus in Clondalkin has recorded the highest emissions from backup generators, discharging nearly 130,000 tonnes of CO2 since its inception in 2017. A spokesperson for South Dublin County Council acknowledged the importance of data centres for funding local authorities, stating they have cultivated a reputation for attracting large tech companies. This revenue facilitates the provision of essential community services.

Fingal County Council also benefits significantly from data centre income, with a representative stating that the contributions play a vital role in supporting a wide range of services essential for community well-being.

Concerns Over Dependency and Sustainability

While the income generated from data centres is substantial for many councils, it also raises concerns. Approximately 20% of South Dublin County Council’s commercial rates income is projected to come from data centres by 2025, and for Meath County Council, this figure is close to 17%. Patrick Bresnihan, an associate professor at Maynooth University, cautioned that increased reliance on revenue from data centre operators could leave local authorities vulnerable should these businesses decide to relocate.

Bresnihan emphasized the need to avoid deepening dependency on data centres. He pointed out that these facilities are increasingly integral to the national electricity grid, with their own energy plants capable of supplying power back to the grid. This reliance could shift local governance and sustainability priorities.

The investigation also highlighted discrepancies in the data, noting that some commercial rates calculations are based on outdated satellite imagery and inaccurate property classifications. As a result, actual income from data centres may vary, and some councils may receive more or less than estimated.

Meath County Council, for instance, has reported close to €10 million in income from a large Meta campus in Clonee and an Amazon data centre near Drogheda. A spokesperson noted that this income significantly impacts the council’s revenue budget, aiding in the maintenance of essential services across the county.

Bresnihan posited that the increasing financial reliance on data centres for local infrastructure and services could lead to what he termed “privatisation by stealth.” He suggested that while the financial contributions are not inherently negative, they could create leverage for data centre operators in local governance.

To mitigate these risks, increased funding from the national government could alleviate some of the financial pressures on local authorities. A spokesperson from the Department of Housing acknowledged that while local authorities derive income from various sources, government grants and subsidies have recently surpassed commercial rates as the primary funding source.

The findings from this investigation highlight both the economic benefits and potential vulnerabilities associated with the growing presence of data centres in Ireland. As local authorities navigate this complex landscape, balancing financial needs with sustainable governance will be crucial for the future.