New Irish Large Energy Users Connection Policy

Introduction 

The considerable wait for a revised connection policy for large energy users has ended with the publication by the Commission for Regulation of Utilities (CRU) of its decision paper on the Large Energy Users Connection Policy¹ (Decision Paper) on 12 December 2025.

The Decision Paper puts forward new criteria by which data centre applications for grid connections will be assessed. These criteria include the following for data centres with a maximum import capacity (MIC) above 10 MVA:

1. The ability of the data centre to provide new onsite or proximate dispatchable generation.
2. Provision of new renewable generation of at least 80% of the data centre’s annual demand.
3. The location of the data centre connection application and whether it is in a constrained region of the electricity system.

Separate criteria apply to data centre applicants seeking a MIC of between 1 MVA and 10 MVA and below the de minimis threshold of 1 MVA.

In the Decision Paper the CRU directs EirGrid and ESB Networks (the System Operators) to use these assessment criteria to determine whether a connection offer can be made within the system security and reliability needs of the electricity network (the New Direction).

The Decision Paper states that the New Direction supersedes the 2021 Direction, however, the executive summary mentions that it only applies to new data centre connection applications after its date and it appears that pre-existing applications will still be processed in accordance with the 2021 Direction.

In this briefing, we:

1. Explore the context leading to the publication of the Decision Paper.
2. Identify and discuss 5 key developments introduced by the Decision Paper.
3. Outline what the next steps of the process are.

Whilst the Decision Paper is the end of a long period in which few new connection offers were issued to data centres, it does place significant new requirements on data centre developers. The Decision Paper must also be considered in light of obligations of System Operators regarding access to the transmission and distribution systems under both Irish and EU law.

 

Background

Ireland has seen considerable investment in data centres in the last decade. In connection with this, EirGrid first issued a policy specific to data centres on 12 June 2019 – the Data Centre Connection Offer Process and Policy, which was subsequently updated in July 2020. These policy papers included provisions specific to data centres including flexible demand in constrained areas and availability of firm capacity only once on-site dispatchable generation was installed.

Following this, the CRU issued two directions to the System Operators in 2021. The second such direction in November 2021 (the 2021 Direction) required the System Operators to assess applications on the basis of:

1. Location (whether constrained or not).
2. Ability to bring flexible demand onsite.
3. Flexibility of the data centre’s demand through onsite generation to support security of supply.
4. Ability to provide flexibility by reducing consumption.

Since then, the CRU has issued a number of further papers including:

• a Call for Evidence regarding Large Energy User (LEU) connection policy in 2022;
• a review of the LEU Connection Policy Call for Evidence in 2023;
• a Consultation on LEU Connection Policy in 2024; and
• a Proposed Decision on LEU Connection Policy in February 2025.

As the process evolved, new considerations have been introduced, for example, for new applicants following the LEU Connection Policy Call for Evidence in 2023, the System Operators were required for the first time to consider emissions profiles of proposed facilities and the contribution to decarbonisation of Ireland’s economy. However, applicants prior to this date were not subject to this consideration.

Despite being called a Large Energy Users Connection Policy, the Decision Paper solely impacts data centres, and the policy changes it makes do not apply to any large energy users from other industries who may seek a connection. The CRU states that this was due to the rapid rate at which contracted demand ramps up and the large flat energy profile of data centres. It is also notable that despite being described as applying to “energy users”, the Decision Paper is limited to electricity connection policy with the CRU stating that it is actively engaging with Gas Networks Ireland on the introduction of an interruptible gas capacity product and will consult on this in the near term.

As such, the Decision Paper marks the end of a period of considerable uncertainty in which few new connection offers were made, however, as set out below, certain of its requirements are onerous and there is a lack of certainty for applicants around certain of the criteria. We highlight some of the critical points of the Decision Paper below.

 

Our 5 Key Takeaways

Our 5 key takeaways from the Decision Paper and the New Direction are:

1. 3 Classes of Data Centres

The Decision Paper introduces three classes of data centres and applies different requirements to each:

1. De-minimis data centres with a Maximum Import Capacity (MIC) of less than 1 MVA.
2. Those with an MIC above the de-minimis but less 10 MVA (Tier A).
3. Those with an MIC equal to or greater than 10 MVA (Tier B).

Tier A and Tier B are discussed further below.

For de minimis data centre connection applications, the System Operators should take into account the level of constraint at the relevant location but otherwise the policy set out in the Decision Paper will not apply, most significantly, there is no requirement to provide generation at or near the data centre or to provide new renewable energy generation.

The CRU has also considered “project splitting” and the de minimis threshold will be assessed against the size of the “whole project”. It specifically states:

1. Existing projects increasing their MIC to 1 MVA or more (even if the increase is less than 1 MVA) will not be de-minimis.
2. Multiple applications below the de-minimis level by the same project/owner will not be permitted and will be treated on an aggregate basis.

The CRU has said that it may review the de-minimis provisions and level as necessary.

2. Locational Assessments

The CRU states that parts of the electricity system in Ireland are constrained. For this reason, the CRU has directed the System Operators to take account of the location of the requested connection and whether it is constrained or not (to include the demand and associated onsite/proximate generation) when considering if a connection can be offered.

If a connection can’t be facilitated the System Operator should provide reasons to the applicant based on objective and justified criteria. As mentioned above, the locational requirements apply to all data centres including those below the de minimis threshold.

The System Operators will publish up-to-date locational information outlining the availability of capacity on the system to allow developers make informed decisions. As part of the Decision Paper’s implementation, System Operators are required to provide their initial proposals on system availability to the CRU by 31 March 2026. The System Operators are additionally required to develop and publish an engagement and connection process for data centre connection applicants by 31 March 2026. This is hoped to provide applicants with the transparency and clarity necessary to enable informed applications.

3. The Tiered Approach

As mentioned above, in addition to the de minimis, the CRU has also introduced two new classes of data centre.

Tier A – MIC between 1 MVA and 10 MVA

Tier A data centres must provide a new autoproducer unit delivering behind the meter services. This is a generator/storage unit on the same grid connection as the data centre. The key conditions are that it must:

1. Meet 100% of the site’s MIC on a de-rated basis.
2. Not be bound by limited run hours and be made available to the System Operators on an operational basis.
3. Be registered and participate in the Single Energy Market (SEM) (the Irish wholesale electricity market).

These conditions will ensure that the data centre’s demand is balanced by operational generational capacity to support the system. This unit must make its energy available to the System Operator and the wholesale market, amounting to a continuous contribution to system stability.

Tier A data centres which comply with these requirements are exempted from having to meet Mandatory Demand Curtailment (MDC) provisions. This means that these data centres will avoid being told to shut down or even reduce their power during grid emergencies. However, see below regarding application of MDC where there is a failure to meet the requirements.

The Decision Paper includes some flexibility within Tier A as follows:

1. It includes provision for multiple data centres with an aggregate MIC of less than 10 MVA to develop a single shared generation and/or storage facility.
2. It allows a single data centre with an MIC less than 10 MVA to develop a separately connected proximate generator and/or storage facility (see further detail below in relation to Tier B).

Similar to de-minimis data centres, the CRU has applied “project splitting provisions”. These are that the 10 MVA threshold is based on the size of the whole project. Multiple applications below the 10 MVA threshold level for the same project will not be permitted.

Tier A data centres must comply with the renewable energy requirements set out below.

Tier B – MIC greater than or equal to 10 MVA

Tier B data centres are those with an MIC greater than or equal to 10 MVA.

Like Tier A data centres, Tier B data centres must provide a new dispatchable onsite or proximate generation and/or storage capacity. Like tier A, this must both match 100% of their MIC on a de-rated basis and participate in the SEM.

However, the major difference is that for Tier B data centres the generation must be connected and metered separately from the data centre, requiring its own grid connection. This grid connection will need to be applied for separately. The CRU notes that a consequence of this approach is that network charges would be levied on the data centre’s entire demand (and not just on quantities imported in addition to the power generated by the on-site/proximate generation).

The CRU has stated that it must be electrically close to the data centre but did not see merit in defining “proximate” on a geographic basis. The CRU has stated that in the first instance, applicants should seek to propose generation at the same node as a proposed data centre demand connection, however, where this is not feasible, the applicant could propose other options to the System Operators for consideration. Assessment of proposals from applicants will be on a case-by-case basis by the System Operators. This appears to leave significant discretion to the System Operators and it is unclear how it will operate in practice.

The CRU has provided that multiple data centres may where feasible, provide a single proximate generator to provide for their collective MIC.

The de-rating factors applied to the new generation/storage provided by generators will be based on the de-rating curves that are published for the most recent CRM T-4 capacity auction in the SEM.

A new data centre connection will not be permitted to become operational or ramp up to its full MIC until:

1. It has delivered associated onsite or proximate generation with a de-rated capacity which meets the data centre’s ramped or enduring MIC.
2. The onsite or proximate generation is participating in the SEM.

Tier B data centres must comply with the renewable energy requirements set out below.

Tier B data centres which comply with these requirements are also exempted from having to meet mandatory demand curtailment (MDC) provisions. However, again, see below regarding application of MDC where there is a failure to meet the requirements.

4. Mandatory Curtailment/Reliability Requirements

The Decision Paper discusses MDC. LEU sites which are subject to MDC at a time of system emergency may be instructed to reduce demand by the System Operators. If they fail to do so in the allowed time, they may be prioritised for disconnection. As mentioned above, the CRU has stated that data centres which comply with the requirements to provide autoproduction or on-site/proximate generation will not be required to meet MDC provisions.

Reliability of service will be a contractual requirement for the data centre demand connections. If the performance and availability of the autoproducer or on-site/proximate generation falls below the minimum reliability standard for provision of available capacity to the system, the System Operators will have the ability to reduce the MIC of the data centre’s demand connection. This will be set out by the System Operators in the grid connection agreements and the detail of the reliability standard will be of significant importance to developers.

5. Renewable Electricity Requirement

Data centres operating at or above 1 MVA must provide or procure renewable electricity generated in the Republic of Ireland which is fed into the Irish electricity network. This must meet at least 80% of the data centres’ demand on an annual basis. Key requirements in connection with this are that the renewable generation:

1. Must be new/in addition to renewable generation which is operational on the system (repowering of decommissioned facilities can be counted towards this requirement).
2. If it has previously or is currently contracted through support mechanisms such as REFIT, RESS or ORESS cannot be used to meet this requirement.

As such, data centres will be expected to support the new development of renewable energy generation through either developing their own wind or solar farms or entering into long term corporate power purchase agreements.

As part of their application for a connection agreement, a data centre developer will be required to deliver a credible plan identifying the specific renewable projects and anticipated timeline for development. The plan should take account of the expected output of the renewable facility.

The CRU has introduced a six-year ‘glide path’ from the date of the demand site’s energisation to meet these requirements. Compliance with the renewal obligations are to be addressed in the connection agreements with the System Operators. Failure to comply with this 80% annual target permits System Operators to reduce the facility’s MIC to “the amount met by 80% renewable energy”. As part of the implementation of the Decision Paper, the System Operators will develop a ruleset for how to assess this requirement, including addressing instances of non-compliance.

The Decision Paper proposes that facilities’ production of up to 80% annual renewable electricity can be taken into account when reviewing the requirements for autoproduction or dispatchable onsite or proximate generation in the SEM.

 

What Next?

The Decision Paper sets out the next steps which primarily relate to implementation of the CRU’s policy decisions by the System Operators but also addresses certain other matters related to data centres.

The key next step is that by 31 March 2026, the System Operators must:

1. Publish an engagement and connection process for data centre applicants.
2. Provide initial proposals on regular publication of locational information on availability of capacity and network constraint.

In relation to Fault Ride Through, which is a source of serious concern to data centre operators, the CRU stated that new grid code standards are being progressed and are intended to apply to new connections.

In the Additional System Operators requirements section of the New Direction, the CRU also requires the System Operators to:

1. Update their contractual requirements.
2. Provide a bi-annual report to the CRU on the implementation and effectiveness of the new policy.

Developers will eagerly await the publication of the proposed process and the updated contractual requirements as, although the Decision Paper makes significant changes, the manner in which the System Operators implement those changes will also have a significant impact.

 

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