Can Data Centre Regulations Speed Up the Energy Transition?

The unstoppable charge of AI and has pushed data centres firmly into the the spotlight. In many ways, it has been the defining story of the decade thus far.

That said, the spotlight has not always flattered AI. As the demand for the technology has grown, so too has the scrutiny on its consumption of energy. 

While AI has only been a major global industry for a few years now, policymakers are already starting to intervene to limit the worst environmental impacts of data centres.

In recent months, Ireland has become a key test case. In 2025, the Commission for the Regulation of Utilities ruled that new data centres must source at least 80% of their power from additional domestic renewable generation.

The move has sparked mixed reactions across the energy and technology sectors, with some warning of constraints on growth while others see a blueprint for sustainable scaling.

For Niamh Gallagher, AWS Country Lead for Ireland and Infrastructure & Public Policy Lead for EMEA, the regulation represents a structural shift in how data centres engage with energy markets.

Speaking at the Wind Energy Ireland conference in Dublin, she described the policy as creating “structured long-term demand” for renewable power tied directly to data centre expansion.

'Converting ambition into bankable megawatts'

A central mechanism linking data centres to renewable development is the power purchase agreement, or PPA.

Through these long-term contracts, operators commit to buying electricity from wind or solar projects, typically over 10 to 20 years. For data centre developers, this provides predictable energy pricing and supply certainty. For energy producers, it unlocks financing for new capacity.

Niamh points to corporate PPAs as a way to “convert ambition into bankable megawatts”, effectively tying the growth of AI to the growth of renewables.

This model is particularly relevant in Ireland, where the country's offshore wind ambitions – including a 5GW target by 2030 – have been stuttering.

Data centre-backed PPAs could help bridge that gap by underwriting future demand.

Amazon's 

Amazon is one of the world's largest hyperscalers, currently operating around 900 data centres globally with plenty more in the pipeline. At the same time, it is the world’s largest corporate buyer of renewable energy, with more than 600 wind and solar projects around the world, capable of generating roughly 40GW.

In Ireland, Amazon has already secured agreements covering 310MW of renewable capacity, with a longer-term target of 800MW – comparable to the output of two conventional power stations.

One example is its partnership with Bord na Móna on the Derrinlough wind farm in County Offaly, expected to generate enough electricity for 90,000 homes.

Gallagher emphasises that such corporate agreements enable renewable projects to be delivered “on time, on budget and with no subsidies and at no cost to the taxpayer”. While this narrative aligns with policymaker concerns over public spending, critics argue it also reinforces the framing of data centre expansion as inherently beneficial to the wider energy system.

Reframing the data centre debate

Despite growing alignment between digital infrastructure and renewable energy, data centres remain a contentious issue within Ireland’s energy landscape.

Their rising electricity demand has drawn criticism, particularly as the country struggles to meet climate targets and households face high energy costs. Concerns over grid capacity and prioritisation continue to shape public discourse, as highlighted in debates around the Irish grid.

Gallagher, however, argues that the conversation should extend beyond consumption. She points to the role of AI systems hosted in data centres in improving efficiency across other sectors.

Citing analysis from Iberdrola, she notes that Amazon’s technologies have helped reduce operating costs by 10% to 30%, with savings ultimately passed on to customers. The implication is that data centres, while energy-intensive, can also enable system-wide reductions in emissions and demand.

“Ireland has the wind, the policy direction and the demand,” she says. “Now it’s about delivery.”