Data centres are big business

The UK negotiators unpicking their legal entanglements with the EU are trying to plot a long-term course to allow business to function in an age when data moves freely across borders, a world in which there are no opening or closing hours.

Many of the big players will probably opt to locate data centres in more than one location, but this strategy involves significant cost and potential regulatory pitfalls.

And the opportunities for Ireland are significant.

But there were warnings, at this week’s Symposium on Data Centres, organised by the Irish Centre for Cloud Computing and Commerce, that the competition will be keen from major data-hosting centres, including Amsterdam, Paris, and Frankfurt, as well as the new kids on the block, such as Norway and Denmark.

Denmark has been in the news in the past year, because it was chosen by Apple as the location for a second data-centre site.

Apple has become exasperated by the planning delays facing its €850m Athenry data centre project, and as Taoiseach Leo Varadkar found late last year, during a trip to California, the iPhone maker is most reluctant to give a definitive commitment to the Co Galway project.

Norway has, meanwhile, stepped up the stakes: A major incentive package, which came into effect this month, offers a zero property tax, as well as very low electricity charges, specifically to attract foreign data centres to Norway.

The data-centre industry is growing quickly, due to users’ demand to host data in the cloud, rather than hold information on personal computers.

The increase in the digital economy is fuelling demand, too.

Ireland has become one of the data-centre hubs for a long list of tech giants that includes Microsoft, Amazon, Google, Dell EMC, and Yahoo, as well as IBM, HP, and Facebook.

Garry Connolly, who is president in Ireland of industry group, Host, said at last week’s conference that ’’there has been an explosion in the demand for data across all business sectors, from mobile phone companies, social media companies, motor companies and their drive to driverless cars to major retailers building up customer profiles”.

He said: “More and more data centres will have to be built to meet this ever-increasing demand.”

Despite the successes in building up data centres over the past few years, Mr Connolly said that staying ahead of the international competition would require improvements in Ireland’s offering.

One improvement is streamlining of the planning laws for data centres, to prevent another company, such as Apple, getting entangled in the Irish planning system, involving objections to the huge amounts of power that data centres require.

Another solution, he said, was to promote “the greening” of the electricity supply.

Data centres are major users of electricity.

Not only must there be a low-cost supply, there was a need by all the major players to increase the electricity supply from green sources, such as wind energy.

The Government’s target of generating 40% of electricity from renewal energy sources by 2020 was deemed “an important competitive positioning” for Ireland.

The connectivity to the rest of the world is crucial for data centres, said Mr Connolly, referring to the new direct-fibre connection from France to Ireland, which bypasses the UK, and which is planned for late 2019.

The connection was vitally important, as Brexit added to the regulatory questions over data pumped down the cable connection to Britain, he said.

Government officials told the conference that the e-government strategy was well underway.

It envisages a “soft launch” of its Digital Services Gateway in December.

Legislation for personal identification is expected to pass in the next few months.

Such developments would substantially increase the demand for secure data storage.

Hence, the Government has committed to building an extensive public sector data centre for the Backweston facility in Celbridge, in Co Kildare.

Planning permission for the project has been submitted.

The UK data centre market is the largest in Europe, but that that will change, once the EU’s new data-protection regulations become law in May, and Ireland is set to take advantage.