Amazon has promised to achieve net-zero carbon emissions by 2040 and to use 100 per cent renewable energy by 2025, including in Ireland. This is more than a target – the US e-commerce and data hosting giant has branded these commitments a “Climate Pledge” and its boss Jeff Bezos has got many other corporations to join it, among them Microsoft and Unilever just last week. 

The pledge is a bold one when your business is in logistics and data centres – two of the most energy-hungry industries mankind has ever engaged in. It leaves one important question: where will all this green energy come from? 

As reported earlier this year, Amazon Web Services (AWS) has been investing in Irish data centres at a rate of half a billion euro per year. Its dedicated subsidiary Amazon Data Services Ireland (ADSIL) employed 1,728 people last year and charged other group companies €2.5 billion for the use of its server farms in this country.

Speaking at a virtual company event on Thursday, AWS Vice President of Global Infrastructure Peter DeSantis said that the company was on track to meet its 2025 target and reminded viewers that Ireland and Sweden were the first countries outside the US where it began sourcing renewable energy directly last year. “Amazon is now the largest corporate procurer of renewable energy in the world and has enabled over 6.5GW,” DeSantis said, quadrupling the global volumes contracted this year compared with 2019.

Yet the reality behind the Climate Pledge has irked environmentalists from the start. The lobby group Greenpeace recently commissioned an analysis of the power needs associated with AWS’s business here and their potential impact on Ireland’s energy supply and targets. The resulting figures, exclusively obtained by The Currency, show that AWS has a big job on its hands to meet all its energy needs from renewables within the next five years. 

The analysis conducted earlier this year estimated the nameplate capacity of existing or planned AWS data centres in Ireland to be 618MW. As calculated by Greenpeace researchers: “If Amazon were to operate its existing and planned Irish data centers at full capacity 24/7, it could consume as much electricity annually as 1.5 million Irish households.” There were 1.7 million households in the Republic of Ireland at the time of the 2016 census.

Given the fast pace of Amazon’s investment in this country, these figures are already out of date: since the calculations were made, the company obtained planning permission in September to build three data halls on a greenfield site in Grange Castle in south-west Dublin, where large server farms including some of Google’s and Microsoft’s are already located. Planning documents show the environmental impact assessment of the project was conducted “on the basis that the proposed development will consume 128MW of power”. This brings the full capacity of Amazon’s Irish fleet broadly in line with nationwide residential electricity consumption.

As pointed out by Greenpeace, market leader AWS accounts for over one third of all existing and planned data centre capacity in Ireland as measured by the consultancy Bitpower in bi-annual reports for the industry organisation Host in Ireland. This proportion remains unchanged now that the Grange Castle site is under construction, pushing AWS’s Irish fleet over 700MW, while the latest Bitpower/Host in Ireland report in November put the national figure at just under 2GW.

To hep match this demand with renewable energy, Amazon has signed purchase power agreements (PPAs) with three Irish wind farms under development. Recent planning documents also signal the installation of solar panels on new data centres’ rooftops, though this likely to contribute only modestly to the facilities’ needs.

Who are Amazon’s wind farmers?

AWS has so far announced three power purchase agreement (PPAs) totalling 229MW of installed capacity in Ireland. All are developed by Enerco Energy, a renewables subsidiary of Michael Murnane’s Cork-based Craydel engineering group. Craydel has been developing wind assets with the London-based specialist investment fund Asper under the Invis Energy banner. 

Once the wind farms are complete, their developers may decide to sell them and the associated purchase commitments from Amazon to longer-term owners as fixed-income investments. There is no shortage of capital interested in these opportunities, as illustrated by the oversubscribed placing of €125 million in new shares concluded by Greencoat Renewables on Tuesday. The yieldco plans to tap into a €500 million potential acquisition market in Ireland and overseas and its chairman Rónán Murphy said it would “continue to build a high-quality portfolio of assets with long-term, contracted revenue”.

Ardderroo Wind Farm, Co Galway

Amazon announced its PPA with Addderroo on August 24. The 115MW wind farm obtained planning permission last year for 29 turbines among the largest in the country – 178.5 m in height – at the gates of Connemara. It is due to open in 2022. It is a joint venture with Asper and the UK investors own 50.25 per cent of the project.

Esk Wind Farm, Co Cork

The eight-turbine Esk project near Mallow has a rated capacity of 23.4MW. It was the first Irish PPA announced by Amazon in April 2019, originally with Invis – though it now reports full ownership by Craydel. It was due for completion by September but was not yet connected to the grid, according to the latest update from the ESB published on September 14.

Meenbog Wind Farm, Co Donegal

The 19-turbine, 90MW project under construction on the border near Ballybofey is part of Craydel and Asper’s joint investment programme. The vehicle for the project, Planree Ltd, is 50.25 per cent-owned by the London fund. Amazon expects to start buying power from it in 2022. 

The site saw a spectacular landslide last month, when residents witnessed pieces of bog carrying standing trees float down a hill. The incident illustrates the wider environmental impact wind farm development may have beyond the removal of greenhouse gas emissions. It is unclear what carbon footprint the project will now have after being associated with the disturbance of large volumes of carbon-rich peat soil.

The successive PPAs announced so far by AWS with Irish wind farms of increasing size amount to a total installed capacity of 229MW. Turbines, however, depend on weather conditions for their electricity yield and don’t run at full capacity all the time. “These projects will deliver roughly 77MW wind power to the grid, just a fraction of AWS’ energy demand,” according to Greenpeace. “If AWS fails to invest in additional renewables projects and builds all the data center capacity it is currently planning, these wind projects will match just 12.4 per cent of AWS Irish data center capacity” (not counting Grange Castle).

At group level, Amazon reported that it used 50 per cent renewable energy globally in 2018 and 42 per cent in 2019. It has set an intermediary target of 80 per cent for 2024. Greenpeace commented: “Without more granular data, it’s impossible to know how far along Amazon’s data centers are in their transition to renewable energy, and how the company is performing region by region as it adds new renewable energy projects and also continues to build more data center campuses.”

When it comes to AWS’s Irish data centres, the environmental organisation estimates that the energy mix has not been significantly different from that of the national grid, which was 33 per cent powered by renewables in 2019.

How solid are Greenpeace’s figures?

Greenpeace calculated its own estimates in the absence of public data on energy consumption from AWS. When queried by The Currency, the company declined to confirm the figures or to provide its own data.

Greenpeace research, supervised by US campaign director Rolf Skar with academic support, is based on emissions permits obtained by ADSIL for backup generators, which are expected to power each data centre in case of a power cut. The calculations assume 2MW capacity per generator and discount two to four generators per site, any smaller roll-up generators, and almost 30 per cent capacity to allow for redundancy.

The Currency verified a sample of the source documents and calculations provided by Greenpeace and found them to be accurate, or even on the conservative side. Detailed licensing information was unavailable for four older data centres and no energy consumption was attributed to them.

When comparing AWS’s power needs with Irish residential consumption, Greenpeace uses the median figure of 3,500kWh per household, equating them with 1.5 million households. This is arguably slightly more dramatic than using the average domestic consumption of 4,200kWh, which would put AWS’s estimated nameplate capacity on a par with 1.3 million households. 

On the renewable energy sourcing front, the combined installed capacity of the three developing wind farms contracted to AWS to date is confirmed to be 229MW in public statements from both Amazon and their developers. “In each case we adjusted the nameplate capacity by the appropriate capacity factor to determine net renewable output,” Greenpeace explained. The capacity factor determines the electricity delivered by turbines based on the weather conditions in their location and was either provided by Amazon or by industry figures for each region. Again, independent verification by The Currency found the estimates to be accurate, resulting in 77MW average combined output from the three farms.

The 12.4 per cent match identified by Greenpeace between AWS’s Irish demand and renewable sourcing of electricity, meanwhile, results from a choice that is less easy to verify. It compares the real yield of turbines, averaged for the fluctuations of real-life wind conditions, with the overall estimated capacity of data centres assuming they will run at full tilt from day one. However, the latest Bitpower/Host in Ireland report estimates that existing Irish data centres currently run at 55 per cent utilisation. “Note also that completed data centres may take a number of years to reach full occupancy,” Bitpower CEO David McAuley added. Applying this utilisation rate to AWS’s existing and planned Irish fleet, its three developing wind farms would cover closer to 19 per cent of its needs.

By all accounts, AWS has a large gap to close before its expanding Irish data centre business is entirely powered by green energy. How it achieves this in the next five years will be crucial both to the company and to Ireland’s wider energy industry.

Producing or directly purchasing renewable electricity is not the only way Amazon uses to match its commitments. In its renewable energy methodology, the company states that it takes into account the share of renewables in the national grid and adds it own “projects” to report annual performance.

Such projects may include rooftop solar on data centres and dedicated PPAs such as those with Irish wind farms, but also renewable-only energy contracts with established suppliers and utilities, and purchases of “environmental attributes”. These are certificates proving that renewable energy has been produced elsewhere and not claimed by any other user in their environmental reporting. In Europe, the integrated market for Guarantees of Origin allows businesses to trade such certificates across 26 countries.

“We may choose to purchase additional environmental attributes to signal our support for renewable energy in the grids where we operate in line with the expected generation of the projects we have contracted,” Amazon states. This suggests that the practice is temporary, offsetting continued fossil fuel use while dedicated assets are being developed to supply green energy to the company. Ireland is one of five data centre regions in the world where AWS reports purchasing environmental attributes, although it does not disclose figures. 

Amazon has been developing new data centres in Dublin and in Drogheda. Photo: Thomas Hubert

Greenpeace is critical of this approach and wrote: “Amazon’s approach still relies on matching and offsetting. Given the urgency of the climate crisis, it’s critical to look under the hood of corporate renewable energy strategies and ensure companies invest in real renewable projects wherever they operate.”

The environmental organisation urges AWS to source new renewable power for any new needs: “As a start, Amazon must pair its data center expansion in Ireland, and all its regions, with similarly sized renewable energy projects. Without doing so, new load growth from AWS data centers and others could lock countries into new demand for fossil fuels, gas in particular, and potentially hold the country back from meeting its own renewable energy transition targets.”

There are signs that the company is planning to move beyond its three existing PPAs with Irish wind farms. “Once all projects are operational, we will be the largest single corporate buyer of renewable energy in the country, and we won’t stop here,” Amazon said in a statement at the end of August. “You can expect to see us announce more renewable projects as we head towards our 100 per cent renewable energy goal.”

Given the size of AWS’s electricity needs and the tight timeframe to meet its commitments, an obvious option for the company would be to secure a PPA with one of the proposed offshore wind farms to be developed along the east coast.

Echelon

One plug into the grid for Echelon’s data centre and SSE’s wind farm

On November 17, Niall Molloy’s independent data centre developer Echelon and the renewables division of utility SSE announced they would jointly develop a €50 million power substation in Arklow, Co Wicklow. 

Echelon obtained planning permission for a €500 million, 100MW-capacity data centre at the town’s Avoca River industrial park last year. Until early November, the company was in pre-planning consultation with An Bord Pleánala for a 110kV substation to power the site from the grid.

A few days later, the project shifted up one gear. Instead, Echelon and SSE will go high-voltage and build a joint 220kV substation into which they will plug both the data centre and the proposed second phase of the Arklow Bank offshore wind farm, providing them a connection to the national grid.

Arklow Bank phase 2, which is currently at the pre-planning public consultation phase, would see 76 turbines installed in shallow waters off the Wicklow coast at an estimated cost of €1 to 2 billion. Their 520MW capacity would dwarf any existing wind farm in Ireland. In addition, steadier wind conditions offshore would yield 40 per cent of this on average – higher than on land.

SSE Renewables’ director of developments Barry Kilcline said last month that the planned joint substation was “a major innovation for the integration of renewables and data centres into Ireland’s national grid”. Molloy added: “It is also a model for the future, where data centre facilities are located close to the source of renewable energy, providing a constant demand for the power and working with renewable energy providers to facilitate the development of the necessary infrastructure.” 

The two companies have so far agreed to collaborate on the substation only. Spokespeople for Echelon and SSE said it was too early to talk about a PPA between the data centre (due for completion in 2022) and the wind farm (not until 2025), adding that the choice of power supply would ultimately be determined by Echelon’s tenants. 

Some may choose to buy local but in any case, the Avoca River data centre would not absorb the wind farm’s entire output. SSE currenlty plans to apply for government support  next year under the Renewable Electricity Support Scheme for the project to supply the general market.

The Government has set a target to produce 70 per cent of Ireland’s electricity from renewables by 2030 and has just re-opened subsidised contracts for new wind and solar farms to supply the national grid. The added value of corporate PPAs such as those signed by Amazon so far is that, while their contracted power transits through the grid, it is traded separately from the all-island electricity market and ineligible to government support. This leaves resources from public service obligation levies and associated subsidies available to support the transition to more renewable generation for the wider economy – especially households and SMEs.

By contrast, if expanding data centres purchase green electricity from suppliers operating on the traditional market, they only contribute to increasing general demand, simply making the 70 per cent target larger and more difficult to attain.

“Ireland has the potential to generate 9.2 GW of renewable electricity by 2030, far more than needed for Irish consumption,” Host in Ireland president Garry Connolly says in the foreword to the latest Bitpower report. “While talk of exporting the excess power is certainly worth consideration, there is an opportunity to power a more valuable export asset in the form of data.”

If demanding customers, such as data centre operators led by Amazon, create a market for additional, non-subsidised renewable generation, this could benefit everyone by creating economies of scale and triggering improvements to the national grid. If they just compete with the rest of the economy on the general electricity market, we all stand to lose out.

Further reading

From wind farms to recycling: Who is buying into (and financing) Ireland’s green wave?