26 March 2026

Ireland’s capacity market renewal

Preventing data centres and fossil gas from adding billions to energy bills

One of Ireland’s key electricity supply mechanisms – the capacity market – is coming up for its 10-year renewal with the European Commission in May 2028. Without necessary interventions, there is a risk that it could add billions to household energy bills to support data centre electricity consumption; which could run in contradiction to EU state aid rules. 

The Irish capacity market is already set to add over €7 billion to energy bills between 2018 and 2037, via contracts to companies paid through levies on energy bills. Over two thirds of this was awarded to fossil gas plants. In the context of soaring electricity demand from data centres, this total could be set to spiral. With Irish household energy bills having already increased by over €600 per year since 2020, families can ill-afford further price hikes.

The renewal of Ireland’s capacity market comes at a moment of critical inflection for the country’s energy future. With new data centres driving up electricity demand, urgent steps need to be taken to limit this demand and ensure Ireland’s power sector emissions continue to fall. It will also be vital for compliance with EU regulations that data centres contribute proportionately for the strain they are putting on the grid – and ensuring these costs are not passed on to households and businesses.

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