The demand for data center capacity in Europe is skyrocketing, driven by the adoption of AI, digital transformation, and the rapid shift towards cloud and edge computing. A recent report commissioned by the European Data Centre Association (EUDCA) reveals that in 2023, colocation data centers alone contributed €30 billion ($32 billion) to European GDP, a figure projected to soar to €83.8 billion ($90.7 billion) by 2030, as outlined in the association’s latest State of European Data Centers 2025 report.
While traditional data center hubs like Frankfurt, London, Amsterdam, Paris, and Dublin continue to dominate in installed power, emerging regions such as the Nordics, Southern Europe, and Central and Eastern Europe are quickly catching up. These regions are bolstered by investments in renewable energy and improved digital infrastructure to support the growing data center needs.
However, with rapid growth comes significant challenges, particularly in terms of energy availability, workforce development, and regulatory alignment. The International Energy Agency predicts global electricity demand to increase by nearly 4% annually through 2027, with data centers playing a substantial role in this surge.
In Ireland, data centers are projected to consume 32% of the country’s total electricity by 2026, up from 17% in 2022, highlighting the rapid expansion of data center infrastructure in the region. Michael Winterson, secretary general at EUDCA, notes that traditional data center hubs like FLAPD are nearing saturation, facing energy access issues, and encountering public scrutiny over further development.
As a result, investments are shifting towards countries like Portugal, Spain, and Poland, where grid access and local government support are attracting hyperscale and colocation players. Power availability emerges as a critical constraint, with grid access often hindered by regulatory hurdles despite the sector’s willingness to invest in renewable energy.
The European data center industry is also grappling with volatile energy pricing models, where even free energy from renewable sources can be overshadowed by market pricing mechanisms. Winterson emphasizes the need for policymakers to facilitate sustainable practices and streamline grid access for data center operators.
Furthermore, the industry faces a talent shortage, with specialized technical labor in high demand across the EU. Many operators are implementing training and apprenticeship programs in collaboration with local governments and technical schools to address this shortage. Winterson calls for scaling best practices across Europe to tackle the talent gap effectively.
In terms of digital sovereignty, Winterson underscores Europe’s opportunity to build a unified digital market by aligning around GDPR and enabling secure data movement across borders. By leveraging its vast public datasets, Europe has the potential to rival global tech giants and enhance data ownership rights for individuals.
Despite the growing pains and challenges, the European data center sector is poised for significant expansion and innovation in the coming years. With strategic investments in renewable energy, talent development, and regulatory cooperation, Europe can solidify its position as a leading hub for data center operations in the global landscape. When it comes to popular data center locations in Europe, cities like London, Frankfurt, Paris, and Amsterdam top the list. These cities attract hyperscale operators due to factors like real estate costs, power availability, ease of business operations, local regulations, and network infrastructure access.
According to industry experts, Ireland has been a preferred location for hyperscale operations, followed by the Netherlands and Germany. Looking ahead, countries like Spain and Sweden are gaining prominence in the data center industry, showing increased activity and importance.
To ensure the growth and efficiency of the data center industry in the EU, experts emphasize the need for strategic engagement rather than reactive policymaking. Addressing structural challenges such as energy access and regulatory complexity is crucial for the industry’s development. The focus should be on fundamental issues like fixing energy problems to support the sector’s growth.
Industry stakeholders stress the importance of comprehensive, cross-sector actions to avoid hindering the EU’s digital ambitions. By prioritizing key policy areas and addressing overarching challenges, the EU can create a more conducive environment for data center development and innovation.
For more insights on data center regulation and industry updates, stay tuned for the latest news and trends in the field.
Image Source: Meta Odense Data Center in Odense, Denmark. Image: Alamy. The city of New York is a bustling metropolis filled with diverse cultures, iconic landmarks, and endless opportunities. From the towering skyscrapers of Manhattan to the vibrant street art of Brooklyn, there is something for everyone to explore and discover in the Big Apple.
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