What price power?

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27 June 2014 | 0

Paul HearnsThe recently launched Host in Ireland initiative used research from the 451 Group to show that Ireland is in fact a great place to host digital assets.

The research cites many factors from a stable political regime, to beneficial tax structures, good connectivity infrastructure and more that combine to make Ireland a compelling destination for all things digital.

However, the Irish Times today has a story from Bloomberg that details the increasing rush by major tech companies to site data centres and infrastructure in the Arctic Circle.

The article said that Google and Facebook have already sited in Sweden and Finland and it is expected, that Russian and Asian companies will also head north. But why this trend to get where it’s cold? Well the climate is one factor, but the real reason is energy, according to the piece.

With Asian energy usage expected to rise by 80% in the coming years, the piece says, an energy surplus and low price in the Nordics are attracting operators of big data centres inside the Arctic Circle.

Nuclear and wind energy expansion is also predicted for the area that will contribute to an expected surplus of 13% of annual demand by 2025.

This could be a major fly in the ointment for Irish Government ambitions to make us the best small country in the world to host digital assets (or some such guff from the government press office).

While the 451 Group report for Host in Ireland says that we have lower industrial energy prices than the EU average, according to www.statsusireland.com who have a chart based on Eurostat figures, our industrial energy unit price is higher than that of the UK, the Netherlands, Germany, France, in fact only Cyprus is listed as being higher. The Eurostat chart says the EU average is €0.0809, while Ireland’s is €0.1201! By contrast, Sweden’s is €0.0604, Finland’s is €0.0504 and Norway’s is €0.0514. Now, going beyond the price stats for the moment, the 451 Group report does say that 18% of Ireland’s power is generated from renewables, so that is good.

But what all of this highlights is that Ireland can tout its advantages as a destination for digital assets all it wants, but until we tackle the looming shadow of energy costs, it may all come to naught.

We need to reduce our reliance on imported sources of energy (gas) from which to generate electricity and seriously reconsider our national stance on nuclear energy.

The new generation of thorium reactors has great advantages over the old uranium fuel cycle, not least of which is a far lower possibility of by-products that could be used for weapons but also far easier to handle waste.

As the rush for low or no carbon energy production increases, Ireland needs to be able to generate cleanly, but also cheaply, without the need to rely on volatile international markets. One need only look at the current effects of the Ukrainian crisis on gas prices to see how vulnerable we are as a country to the fluctuating energy market.

While I’m sure the 451 Group report is based on some solid research, it does not change the reality that we are over-reliant on energy supplies over which we have no control whatsoever and if we are to continue to attract tech companies and data centre operators in particular, energy cost will likely remain the major weakness in our efforts.

 

 

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