The European Commission published its annual ‘Health Check on the Irish Economy’, offering valuable insights into Ireland’s infrastructure gaps and the growing risk of diminished competitiveness. The report spotlights three critical areas where existing challenges are undermining Ireland’s competitiveness. These include energy, water, and housing supply.
A major challenge for Ireland is managing the increasing demand for energy and housing due to ongoing economic growth. In particular, the growing energy demand of data centres, which is crucial to the digital transformation, is placing additional strain on an energy system already operating near full capacity.
Addressing the issues: energy
Higher energy prices are primarily influenced by external factors, particularly the Russian offensive in Ukraine. As a result, the government should focus on areas within its control, leveraging Ireland’s strong potential for offshore renewable energy and accelerating investment in grid infrastructure. In May, Energy Minister Darragh O’Brien announced €13 billion in funding to enhance grid capacity over the next five years. Minister O’Brien acknowledged the need to develop a strong infrastructure and expand the country’s renewable energy capacity.
Regarding data centres, Ireland needs a clear governing strategy that accommodates technological growth while aligning with national climate goals. Rather than criticising the existence of such centres, a considered approach is essential to determine how best the country can accommodate them.
Speaking at the Global Economic Summit, Taoiseach Micheál Martin criticized the “ill-informed” and “negative domestic debate” on data centres. He stated that investment in technology must be considered part of the green economy as both the digital and green transition are “key pillars” of Ireland’s future.
In an attempt to harmonize the growing demand for data centre connections and legally binding climate targets, the Commission for Regulation of Utilities placed new restrictions on data centre energy usage. However, industry giants such as Amazon, have warned that Ireland is losing out on investment opportunities due to the restrictions. In contrast, energy tycoons have cautioned that growth in data centre demand is “incompatible” with Ireland’s short-term climate goals.
The government must strategically balance climate objectives with the growing demands of data centres, as both are vital to economic prosperity. In an era defined by digital transformation and sustainability, investing in renewable energy has become essential to maintaining economic competitiveness while working towards a greener future.
Addressing the issues: water
A reliable water treatment system is crucial for both industrial and domestic use. However, the State is failing to address persistent issues within Ireland’s water supply system, with key infrastructure projects facing ongoing delays. This has a knock-on effect across the economy, undermining investment attractiveness due to unserved sites and impeding the delivery of new housing developments.
For example, the Greater Dublin Drainage Project is currently in planning and has been in limbo for seven years. This is due to the slow judicial process related to objections and appeals, further complicated by the bureaucratic nature of the planning system itself. Uisce Eireann has warned that there will be no capacity for new homes in Dublin in less than three years if the project, which is estimated to take three years, is not delivered.
Projects like the Greater Dublin Drainage Project are becoming increasingly important due to the rising volumes of wastewater, population growth, economic expansion, and the necessity for newly constructed buildings to be connected to the pipelines. As the government has consistently fallen short of new housing targets, prioritising water connections as part of initial groundworks is essential to accelerating housing delivery and enabling development.
Minister Jack Chambers launched a public consultation for the Review of the National Development Plan. The objective of the consultation is to inform the government’s ambition to prioritise the delivery of “transformative, critical and growth-enhancing infrastructure”. This will determine the level of funding needed for capital infrastructure projects over the next ten years. In the context of the review, Uisce Eireann has stated that in addition to the 12 billion needed to deal with the State’s water infrastructure needs up until 2029, an extra 3.7 billion will be required in 2030.
Ultimately, barriers to project delivery must be addressed if Ireland is to remain competitive. Dublin, as the economic hub, plays a central role in attracting skilled workers. However, this depends on the availability of adequate housing. There are clear and interconnected links between the three core infrastructure pillars: energy, water, and housing. The government must strike a balance between meeting industry demands, securing reliable domestic supply, and advancing sustainable, green practices.
