Europe launches first microgrid data center in Dublin

The data center, just outside Ireland’s capital, Dublin, is the first in Europe to rely on a separate, so-called “island” microgrid to keep servers running.

Europe is poised to profit from the AI ​​boom while grappling with decades-long delays in electricity connectivity. The European Commission estimates that the European Union will need at least 1.2 trillion euros ($1.39 trillion) in investment by 2040. Some companies are impatient for bottlenecks to ease and are turning to their own power sources.

The Dublin facility is operated by power solutions provider AVK and digital infrastructure developer Pure Data Center Group and could be the continent’s first step towards a captive power generation ecosystem.

A microgrid is a localized energy system that can generate, store, and distribute electricity. The system is already widely used in the United States, where a boom in data centers in battleground states such as Texas and Virginia has increased the need for off-grid power.

AVK and Pure DC say their facility in Dublin is the first data center in Europe to be operated by a live microgrid.

AVK CEO Ben Pritchard told CNBC: “As data centers get bigger, AI workloads increase, and that data becomes part of everyday life, the strain on the grid will only increase. So we need to drive alternative solutions.”

The system is not without its challenges. Regulatory hurdles can delay deployment, and the long-term success of microgrids will likely depend on whether their power source is both reliable and sustainable.

Ireland is one of two European countries to impose a moratorium on new data center applications as energy-hungry facilities strain the country’s power grid. These facilities consumed a staggering 22% of the small country’s electricity in 2024.

Ireland’s national electricity grid operator warned in late February that meeting electricity demand could be “difficult” as consumers use electricity in new ways. We identified data centers as the main driver of that demand growth.

But Irish authorities eased the moratorium late last year after the AI ​​boom improved sentiment about economic potential.

All new data centers that connect to the power grid must now provide transmittable power (power that can be turned on or off depending on the needs of the national grid) or have the ability to store energy. It must also source at least 80% of its annual demand from renewable electricity generated in Ireland, in accordance with guidelines set by the country’s regulator CRU.

“The alternative in Ireland was to wait, literally wait for an unknown amount of time to be able to connect to the grid. And we still can’t connect to the grid. So by building a microgrid, we were able to move the project forward,” PureDC president Dawn Childs told CNBC.

Mr Childs, who was appointed Dame of Great Britain for his services to engineering, added that the project was aimed at both immediate and long-term solutions. “If we have to maintain an isolated solution, that is absolutely possible… but it is our desire to establish grid connectivity in order to have the most sustainable solution and return services to the grid in Dublin, which is the most constrained region in Ireland.”

The Dublin data center can run both cloud and AI workloads and has a total capacity of approximately 110 megawatts. Total investment in this location is expected to be around 1 billion euros ($1.2 billion).

The facility is currently powered by a natural gas engine with the ability to switch to hydrotreated vegetable oil (HVO). The facility is also trialling biomethane as a power source.

If the Dublin data center eventually secures grid connectivity, it will be able to provide distributable power and provide up to 20MW of battery storage, Childs said.

Global Market Insights estimates that the global microgrid market will be worth approximately $29 billion in 2025, with the European market expected to grow nearly 10% annually due to aging infrastructure. While investments are being made to modernize the national grid, businesses are expected to increasingly focus on more immediate solutions for power.

Microgrids are already being used to power industrial sites and factories in Europe, but compared to the United States, they are less commonly used to power data centers.

In addition to AVK, other companies include: ABB and siemens We are competing to develop technology. schneider electric Last year, we opened a microgrid test lab in Massachusetts to test the system in real-world conditions.

Siemens sees “potential opportunities” to deploy microgrids at its data center sites and is currently in discussions with several customers, a company spokesperson told CNBC. This topic is particularly relevant to the US market, but similar discussions are taking place in Europe.

Siemens is also interested in the use of microgrids to support electric vehicle charging infrastructure and port decarbonization.

Expected to reach a valuation of at least $1 billion by 2030, AVK initially focused on standby power and backup generation before expanding into a comprehensive power solutions provider.

Microgrid discussions and plans were underway in Europe, but the U.S. market quickly overtook the 27-nation market, the company’s CEO said. “We’re seeing a slightly faster rollout than here in Europe because the demand in the U.S. is so high,” Pritchard told CNBC, adding that the company is now seeing a new type of investor who is specifically interested in microgrids, not necessarily data centers themselves.

“They’re infrastructure funds that are going to build, own and operate microgrids and power data centers,” Pritchard said. He expects this type of asset class to mature over the next three to five years.

McKinsey partner Diego Diaz Hernandez told CNBC that one of the biggest challenges facing the market is how to deploy microgrids sustainably, as much of the discussion around microgrid technology revolves around the use of gas turbines and fuel cells.

“Gridging these assets to participants is a completely different problem in theory and in practice,” Díaz-Hernandez said.

“Technically speaking, it’s very doable to do that, and we’ve seen examples of that in the US, where grid operators are asking for 50 or even 100 hours of flexibility out of the year to relieve pressure on the grid. So they’re not asking for a lot, but putting regulations and policies in place that actually make it possible is a big problem.”

Hernandez said that in addition to overcoming regulations, it will also be important to ensure the reliability of the electricity supply. He noted that about 30% of data centers in the U.S. employ microgrids or other behind-the-meter solutions, such as fuel cells or gas turbines, which are power sources that don’t require connection to the main grid. In Europe, the share was only 5-10% 18 months ago, but has since increased to around 20%, he added.

Challenges aside, the burden on data centers that provide their own power sources is clearly increasing. US President Donald Trump said last week that data centers “need public relations support” amid concerns about the impact on electricity prices.

In his State of the Union address, the president referred to America’s “old power grid” and said big tech companies are obligated to meet their own electricity needs.

“Developing and building microgrids is clearly not part of a data center’s core skillset,” Childs said, adding that PureDC had to hire specialized engineers to build the microgrid in Dublin.

Governments face a difficult balance between meeting the needs of big technology companies while ensuring sustainability goals are met.

“We are the real enablers that will enable large-scale renewable projects to come online, enable grid flexibility, and ultimately lower the cost of electricity for all consumers, both businesses and the general public, but it will take time for policies and regulations to enable and facilitate that,” Childs told CNBC.