Data Centres Generate €62.5 Million for Local Authorities Annually

Data centre operators are significantly boosting local government finances, contributing an estimated €62.5 million each year through commercial rates. This figure, revealed in a recent investigation by The Journal Investigates, highlights the financial impact of data centres on local authorities across Ireland.

The analysis involved mapping all operational data centres in the country, examining over 25 years of planning records and cross-referencing property valuations from the state agency Tailte Éireann. Each local authority sets its commercial rates annually, which are calculated based on property valuations. This revenue is essential for funding various public services, including housing, environmental initiatives, and community programs.

Concentration of Revenue in Dublin

The investigation found that the majority of commercial rates income from data centres is concentrated in three local authorities: South Dublin County Council, Fingal County Council, and Dublin City Council. Most of Ireland’s 89 data centres are situated in industrial estates around the capital. South Dublin County Council alone accounts for over half of the total commercial rates collected from these operators, largely due to a cluster of facilities in Clondalkin, which includes major data centres from Microsoft, Amazon, and Google.

A spokesperson for South Dublin County Council stated that data centres play a crucial role in funding local authority operations. The council has established a reputation for attracting major technology companies, which enables it to provide essential services to the community. In addition, other significant data centre clusters are found in industrial parks in Blanchardstown and Clonshaugh, further enhancing the local authorities’ financial resources.

Fingal County Council echoed these sentiments, noting that commercial rates contribute to a wide range of services that enhance the quality of life in the community.

Concerns Over Dependency on Data Centre Revenue

Despite the financial benefits, experts warn that local authorities’ growing dependence on revenue from data centres could pose risks. In South Dublin, it is projected that approximately 20% of the council’s commercial rates income will derive from data centres by 2025. In Meath County Council, this figure is expected to be around 17%, fueled by a significant Meta campus and an Amazon data centre.

Patrick Bresnihan, an associate professor at Maynooth University, expressed concerns about the sustainability of this revenue model. He cautioned that reliance on data centre income could leave councils vulnerable should these companies decide to relocate. Bresnihan described this growing dependency as a form of “privatisation by stealth,” suggesting that it may subtly undermine local governance and sustainability.

With data centres increasingly integral to Ireland’s electricity grid, their influence extends beyond financial contributions. The presence of on-site energy plants capable of feeding power back into the grid highlights how local authorities may find themselves in a precarious position regarding energy policy and infrastructure.

To mitigate these risks, experts advocate for increased funding from the Exchequer to lessen local authorities’ reliance on data centre revenues. A spokesperson for the Department of Housing confirmed that while local authorities derive income from various sources, government grants and subsidies have recently surpassed commercial rates as the primary funding source.

This investigation serves as a critical reminder of the complex interplay between local finances and the burgeoning data centre industry, prompting discussions about sustainable funding practices for the future.