In a private paper for IDA Ireland directors, senior officials laid bare the challenge faced by the State inward investment agency from big constraints in the electricity network.
The IDA has had many successes over the decades, making Ireland one of the main European hubs for foreign direct investment (FDI) from international tech, pharma and financial groups. This has yielded rich dividends in the form of about 300,000 Irish jobs with 1,800 client companies, and an annual corporation tax take that came close to €33 billion last year.
But the paper struck a distinct note of caution when highlighting electricity problems in an “energy update” to the agency’s board, which said competitiveness was critical.
“Fundamental to this is a reliable supply that meets demand expectations at a competitive price,” the IDA officials said.
“Ireland’s electricity prices are among the highest in Europe, while connections to the grid are constrained due the lack of generation and network infrastructure,” they added.
“Electricity grid connections are not available for new energy intensive FDI projects.”
They went on to say large energy users such as data centres were “not considering Ireland as a viable location” and cited challenges with permits, planning permission and energy connections.
There may be little enough new in that for business people grappling for years with the electricity shortage – or indeed for prospective housebuyers confronted with homes unfinished because of the lack of power.
Still, it appears remarkable that the officials’ stark view was made public at all. The document – presented to an IDA Ireland board meeting on February 5th, 2025 – was released with heavy redactions on foot of a Freedom of Information request to the agency from The Irish Times.
“This issue hasn’t happened in the last five years. This issue has been going on for 10, possibility 15 years,” says Sean O’Driscoll, the former chairman and chief executive of Glen Dimplex who leads the Accelerating Infrastructure Taskforce that the Government established in May.
IDA Ireland has made public its concerns about the lack of grid connections for large projects. Photograph: Dara Mac Dónaill
“This isn’t an issue that happened yesterday or today and it isn’t a surprise to people in industry or people in the energy sector – and that includes ESB and EirGrid,” he adds in reference to the State electricity supplier and the State national grid operator.
“Nobody was encouraged to talk about this. In fact, people were discouraged to talk about it because you were seen to be negative about Ireland, talking down Ireland and talking down our FDI opportunities. The system was in complete denial.”
Despite the electricity risks set out in the board paper, the agency was quick to stress that 2025 still turned out to be a record year for FDI.
Agency figures show 323 new investment projects were secured “across all regions and with associated job creation of over 15,000, underscoring Ireland’s continued success in attracting global investment.”
Asked about its electricity concerns, IDA Ireland says it remains “vigilant in identifying both risks and opportunities” to sustain future growth.
“In recent end-of-year statements, we have emphasised the critical need to address competitiveness challenges to maintain Ireland’s FDI momentum,” it says.
[ Foreign direct investment into Ireland hits record level despite US tariffsOpens in new window ]
“A secure, resilient, and cost-competitive energy supply and infrastructure is essential for Ireland’s strategy to attract investment, particularly across the key growth drivers of digital and AI, sustainability, semiconductors, and health.”
By making public its concerns about the lack of grid connections for certain types of large projects – albeit in redacted documents – the agency appears to be sounding an alarm bell of sorts.
“The challenges to Ireland’s energy system have significant implications for Ireland’s manufacturing sector, and for the attraction of new name business, particularly for energy intensive businesses,” the paper for IDA directors says.
The warning about the scarce grid connections was clear. Yet the paper also cites “external” messaging about progress being made and Ireland being in a better position relative to 2023 – a period of high network pressure – “with respect to electricity availability” for existing and contracted demand.
“Progress is being made (eg new temporary generation, more successful electricity auctions, new strategic policies, progress on offshore wind development, planning legislation development etc.),” the paper says.
“There is a strong commitment in the Programme for Government around securing protecting and reducing the cost of Ireland’s energy, and to accelerate the generation, connectivity and planning of renewable projects.”
Large energy users such as data centres were ‘not considering Ireland as a viable location’, the IDA paper said. Photograph: iStock
Although the board meeting in question took place almost a year ago, it reflects concern that was building for many years about threats to the flow of FDI from the lack of electricity.
Such risks were demonstrated in sharp terms in July when Amazon, the Seattle-based online retail and data giant, scrapped plans to build a €300 million industrial plant in Dublin because it could not secure a power supply.
Not only was the prospect of 500 jobs lost. Of greater concern in FDI circles was the fact that the likely power demand from the proposed plant was considered relatively modest. The proposed Amazon plant was not an energy-intensive data-centre, the type of high-energy building for storing internet and business data that is already subject to regulatory curbs here because of the electricity shortage.
Amazon’s move prompted anxiety in Government circles about the possibility of other investments being lost over the lack of power.
FDI has been central to Ireland’s economic model for more than half a century. This has placed the State in the vanguard of globalisation but made it more susceptible than other countries to the ebb and flow of international trade.
[ Dublin data centre uses as much power as 200,000 homesOpens in new window ]
It follows that electricity pressures come with the stream of future investment from the US – long the biggest source of Irish FDI – coming into question as president Donald Trump attempts to impose his will on the world in his second term.
True, Ireland dodged trouble last year when Trump introduced swingeing “liberation day” tariffs on global trade. Still, this is hardly a moment for home-grown uncertainty about power supplies. In the era of surging corporate investment in artificial intelligence (AI), it cannot be a good thing.
Asked about the “energy update” paper, IDA Ireland declined to say how many potential FDI projects have been lost because of electricity.
But O’Driscoll of the infrastructure taskforce says he has learned directly from multinationals about valuable investments lost to Ireland when the group consulted with industry.
“During the consultation process on infrastructure, several of the most significant foreign direct investors in Ireland made contact with me to share their concerns with me,” he says.
“I can tell you what they said to me. We have [lost] – and are continuing to lose – billions of euro of investment to other sister companies of those multinationals in Europe.
“So something that naturally had come Ireland’s way previously, for the last – I would say – two to three years, some of that has been going to other European countries as a consequence of our infrastructure issues. That’s how serious it is.”
The Government has implicitly acknowledged the problem, handing down approval in December for an €18.9 billion master plan for energy infrastructure. That includes a new €2 billion State equity investment in EirGrid and €1.5 billion in new State equity for ESB.
This strengthens their capacity to finance projects into the medium term, a priority given the need for new generation, transmission and distribution systems in light of what EirGrid has described as “unprecedented” demand for power.
Such initiatives, championed by Minister for Energy Darragh O’Brien, were followed this week by a new large energy user action plan, known as LEAP.
The LEAP aims to improve Ireland’s prospects of attracting a new generation of investment in semiconductors, pharmaceuticals, precision engineering and data centres. New users will be required to locate operations near renewable energy sources, among them energy parks designed to put the most energy intensive industries adjacent to resources such as offshore wind.
Other moves include publication of a new connection policy for data centres and a new private wires policy, aimed at facilitating investment in grid connections.
Cable-laying for the Celtic Interconnector to France has begun, along with preparations for an additional interconnector with Spain, for which a memorandum of understanding between authorities is scheduled in April.
Great Island Power Station in Co Wexford, where an electricity interconnector links with Wales. Photograph: Brenda Fitzsimons
IDA Ireland says the totality of such measures suggests the policy landscape has fundamentally improved “as we enter 2026”.
But the fact remains that electricity and infrastructure is inherently time-consuming, with little shortcuts when the time frames for major projects often span several years.
“It’s ultimately a question of electrons. Darragh O’Brien can’t do anything about the physics,” said a senior multinational executive who spoke on condition of anonymity.
Like other business figures grappling day-by-day with the electricity crunch, the executive said recent Government actions, though welcome, were still years late.
“People have been very slow to get to grips with this. It’s definitely one of the biggest crises of Irish policymaking,” they added, noting deep-rooted problems with Irish competitiveness generally.
“We’re so far off base that there’s a big question over our ability to meet existing demand. When it comes to AI, which has greater energy needs, it really seems unlikely that we’ll be in a position to meet that demand. The risk is that AI Compute, as it’s known, will pass Ireland by.”
Data centres are energy-hungry, so why does Ireland need more of them?
AI Compute, which is shorthand for resources for training and deploying AI, requires large-scale computer resources with huge electricity demand.
This places into perspective the degree of constraint on Ireland’s creaking power network, which is supposed to sustain a population forecast to reach six million by about 2040 with associated economic expansion.
In many ways, the roots of the problem lie in the long-term expansion of the State’s population and economy, which gained pace again as recovery set in after the 2008 crash.
Ireland’s population was estimated at 5.38 million in 2024, compared with 3.79 million in 2000, a 1.59 million increase in a quarter-century. In the same period the numbers working in the State rose to 2.79 million from 1.65 million, a 1.14 million increase.
That was not matched by a corresponding increase in critical infrastructure. This, in turn, placed huge strain on housing, transport, water and energy networks – leading to a situation where one problem often worsens another.
For example, it was only in October that O’Brien intervened to demand urgent action from EirGrid and ESB to ease an immediate threat to new housing in north Dublin from the lack of electricity.
The area is the busiest part of the State for house building and critical for the achievement of new Government housing targets, which call for 300,000 new homes to be connected by 2030.
[ Darragh O’Brien warned ESB and EirGrid over house connectionsOpens in new window ]
“I can tell you in parts of north Co Dublin today you could not connect 1,000 new homes because the infrastructure isn’t there to connect the homes,” O’Driscoll says.
The electrification of heating and motoring means more power is required for modern homes than in the past.
And then there are the demands posed by AI. International Energy Agency research suggests a typical AI-focused data centre consumes as much electricity as 100,000 households, but the largest centres could consume 20 times as much. The point here is that Ireland is still struggling to meet housing demand for power – never mind AI.
Moreover, the lack of housing supply is itself a concern for IDA Ireland.
Separate board papers call for a more co-ordinated effort to attract international funding and resources to support housing: “The availability of housing is central to Ireland’s value proposition for FDI and a greater supply of affordable housing of all types, across the entire country, is urgently needed.”
Replying to questions, the IDA says “Ireland must accelerate delivery of energy infrastructure and enhance strategic industrial planning to meet the demands of the next decade”.
These are priorities now for the group led by O’Driscoll, who expresses confidence in plans to overhaul infrastructure because of “an absolute commitment by Government and civil servants and State agencies”.
“We have been playing Russian roulette with our economy when it comes to energy and infrastructure in general. At least we’re talking about it now,” he said.
“We never planned for the success of our economy or the growth of the population.”