GOOGLE may invest up to €150m in a massive new data centre in West Dublin, the Sunday Independent can exclusively reveal.
The new building could bring the total amount invested in Irish property over the past four years by the California-headquartered company, which employs over 2,500 people here, to as much as €500m.
Google and other US technology giants have come in for criticism over allegations that they are merely using Ireland as a tax base, with recent research suggesting that effective tax rates for US multinationals may be as low as 2.2 percent.
However, this latest proposed investment by the €350bn-valued company reinforces its physical presence in Ireland.
It is understood the internet search giant will file a planning application for the new project tomorrow.
If plans proceed as expected, it will create up to 300 construction jobs over a year or more and up to 60 new full-time jobs once it is operational. A Google spokesperson said: "The data centre that we built in Dublin in 2012 has worked well for us and created around 30 full-time jobs. We're now considering whether to expand our operations – and so we're submitting a planning application. This will ensure that we've taken into account local opinion and rules, if we do decide to build in the future."
Data centres are often gargantuan warehouse-like buildings that house tall racks full of humming computer servers that power the internet, e-commerce, email and social media. Ireland is one of the cheapest place to run them thanks to "free air-cooling" due to our mild climate, meaning companies can save millions of euro a year on their electricity bills.
Last September, Google opened a €75m one – its first here in Ireland – and the new project would be twice its size, situated on an adjacent site beside the Nangor Road, it is understood.
While eyeing this expansion, Google has also recently added to its office investments in the city centre.
Last month, it bought an office at Grand Mill Quay from Nama for €65m, the fourth in its "Silicon Docks" cluster in Barrow Street.
The purchase has fuelled speculation that the company will expand its European headquarters here, where it employs people from 65 countries, mainly in sales, customer support, account management, product develop- ment and finance roles.
Prior to this, it had spent €211m on three huge office buildings: Alto Veltro – the tallest office building in the capital, Gasworks House and Gordon House, which is home to The Foundry, a centrepiece €5.5m 360-seat innovation centre, auditorium and broadcasting studio designed to host teaching, research, conference, R&D and digital media events.
There are currently more than 140 Dublin-based jobs advertised on Google's website, including engineers and a project manager for data centres.
Building blocks for data centres
Google's plans to invest up to €150m in a new data centre highlight how big a player Ireland has become in the space
THEY'RE the engine room of the internet, ecommerce, email, YouTube and our tweeting and social media updates. They are data centres – and, as we reveal on our front page today, Google may invest up to €150m in a new data centre in West Dublin.
This sizeable – and now immensely valuable – swathe of the capital, where the availability of space, well-connected and well-located sites and empty warehouses means it's cheaper and easier to build there than it would be in London or Paris. And it has become something of a hub for these Fort Knox-like buildings.
Not only that, but the world's biggest data centre – featuring 10 buildings each the size as one-and-a-half football pitches – may be built in north Wicklow on a site twice the size of Croke Park if Dublin jewellers and air conditioning businessmen the McDonagh brothers' €1bn plan comes to fruition.
To date more than €1.6bn has been invested in so-called server sheds in Ireland, the IDA estimates. So if the Wicklow project goes ahead and smaller projects are built as planned, that number could exceed €3bn within the next few years.
Microsoft alone will have invested €900m here once it completes the extension –announced in December – of its existing double Croker-sized Grange Castle facility.
While Amazon also owns several data centres here, including one in a huge former Tesco warehouse in Walkinstown, smaller players such as Dataplex – chaired by Digiweb CEO Colm Piercy – and another industry heavyweight Digital Realty, also plan to build two new smaller centres nearby.
Dataplex is currently seeking to raise €30m to build a new data centre by 2016, Digital Realty plans to invest €100m in a new centre, while Eircom plans to build one for €200m.
All of these giants choose to build the data centres here largely because of what's known as "free cooling", but also because of the excellent connectivity in Dublin to the fibre superhighway that snakes across the oceans between here, the US, the UK and Europe.
Because of our cool climate, the warehouses full of servers here need very little air conditioning or refrigeration to stop them overheating: they are super-efficient, resulting in huge savings on electricity bills, according to Digital Realty sales director Gary Keogh.
In the case of Microsoft's data centre – which at full capacity needs the same power as about 70,000 homes – industry insiders suggest the savings could add up to €17m a year.
It's difficult to tell how much money from these investments benefits the Irish economy – the number of construction jobs usually emphasised in headlines doesn't give an accurate picture.
An industry insider indicates that building costs account for 30 per cent of a project cost, equipment 30 per cent and 40 per cent for design, consultants, engineering and other services, so we can get some idea from applying that to some of the above numbers, but those numbers will be skewed on the biggest projects.
All the tech giants approached by the Sunday Independent declined to comment, but partial insight can be gained from looking to Belgium.
Several Irish contracting firms are working there on a new €250m Google data centre in St Ghislain, south-west of Brussels, according to Tom Blake, project director of engineering consultants Arup.
"There's a small cohort of them who have carved out a niche in this area, making them the best in Europe and farther afield at building data centres, having gained the skills and experience working on these types of projects in Ireland," he said.
They include Jones Engineering, Kirby Group, Dornan Engineering, Mercury Engineering, Sisk and PM Group. Between them, these five companies have 6,500 employees and most recently filed annual turnovers totalling €1.8bn.
They also provide a skills base from which the tech giants can cherrypick.
"Now and then one of their people will be poached by one of the tech giants, attracted by a higher salary and regular working hours," he adds.
Further insight can be found by looking at counties such as Meath, Louth, Donegal, Leitrim, Galway and Cork where an eco-system of mainly specialist manufacturing SMEs – aside from heavyweights C&F, Cisco and Schneider, whose last filed turnovers totalled €915m – benefit from the many millions spent on the key electrical and other components.
Schneider Electric make uninterruptible power supplies in Galway; Edpac in Cork makes the vital equipment that enables "free cooling", Anord in Dundalk makes ducting and switchgear; C&F Tooling and Cisco in Galway respectively make server racks and networking electronics; other switchgear, fire doors and panels are made in Cork and Leitrim.
Meath-based Hanley Energy, which designs, supplies and installs UPSes for customers such as Irish Rail, worked for Dataplex here then went on to work for the company on the Isle of Man.
This innovative small company – which recently opened two offices in the US and one in Germany, and created 10 new jobs – has also designed a global award-winning data centre control solution to help data centre operators save between 5 and 15 per cent on their running costs.
Dataplex CEO Eddie Kilbane says that 90 per cent of the materials and equipment used in its data centre were manufactured here; so if Irish contractors were used on its already completed €23m centre, then most of that money boosted the domestic economy.
"On the bigger projects, less money is spent here, but to get them completed on time they have to do so and if they are using Irish contractors as well then the benefit to the domestic economy can still be very significant," he says.
There are also spin-off jobs, such as those announced earlier this month by HP in Galway, where 200 construction workers began building a cloud R&D facility that will house 700 workers.
Yahoo also recently announced that it is moving all of its data-processing facilities here from Europe and plans to increase its workforce here.
"To encourage more collaboration and innovation, we're increasing our headcount in Dublin," the company said, adding, "Dublin is already the European home to many of the world's leading global technology brands and has been a home for Yahoo for over a decade already."
Other big employers using the data centre-dependent power of big data and analytics include firms such as Salesforce, major north Dublin employer IBM, and Amazon – and then there are the start-ups such as cutting-edge sports and athletics performance analytics firm Orreco in Sligo, and other clever innovators such as supermarket price display and analytics firm MarketHub, customer communications firm Intercom and music sharing and analytics software tech company Soundwave in Dublin.
In Carlow, hosting, domain and internet services provider Blacknight – which employs 35 people, hosts 30 per cent of the Irish internet and has 70,000 customers in 130 countries – has opened a new energy-efficient data centre that will underpin its core business and help it create up to 12 new jobs this year and next. The data centre, which can be extended, will save Blacknight between €50,000 and €100,000 a year.
The outlook for further data centre investment and spin-off jobs is cautiously positive, but aside from Cork and possibly North Wicklow, for the foreseeable future nowhere outside of Dublin will see investment in these vital and valuable cogs in the global engine of the internet.
This may not have been the case if plenty of fibre cables had been laid at the same time as our new motorways were built.
"There's definitely an issue about regional connectivity. We tried to locate in Galway but there weren't enough fibre connections. A private company needs to do that and something may happen in the future in that regard," says Kilbane.
Until then, industry observers such as Garry Connolly, founder of industry consultants GconnTec, point to the huge growth of the global cloud services that rely on the data centres of the giants Google, Microsoft and Amazon – whose Web Services users could be growing by up to 120 per cent a year according to research by CIO.com – driving further likely expansion here in Dublin.
The great data race continues.