Grids for data centres

As Europe competes for leadership in the global artificial intelligence (AI) race, governments are responding with ambitious investment plans in cloud and edge computing. In February 2025, European Commission President Ursula von der Leyen launched InvestAI, an initiative to mobilise €200 billion for investment in AI. France’s President Macron announced plans to invest €109 billion in AI over the next few years and the UK is preparing a ten-year investment plan for AI infrastructure.

AI advancements are driving a surge in demand for new data centres as existing facilities are in short supply or no longer fit-for-purpose, being unable to meet the massive need for computation power. However, data centre deployment is coming up against difficulties, and grids have emerged as the primary barrier in traditional data centre hubs. High congestion in these locations means grids are unable to accommodate new facilities: Ireland, an investment hotspot for data centres, was forced to impose a de facto moratorium on new data centres in Dublin until 2028. Similar challenges have also emerged in other key markets like Frankfurt and Amsterdam.

Data centres pose unique challenges to electricity grids compared to other types of energy users. They represent large, localised loads which typically operate continuously and can ramp up their operations faster than most large energy users. Data centres are getting bigger as well. For instance, the Italian TSO Terna reports that data centre capacity applications exceed 140 MW on average. This means data centres have a major impact on the grid, being a large load that can come online in a single location, fast.

As network capacity becomes less available, and congestion and connection times ramp up, industry players are turning to new markets. Better grid availability means new data centres can get online faster and outpace their competitors.

Investment in power grids has become an opportunity for countries to capitalise on the economic opportunities associated with data centre development. These can range from generation of domestic and foreign investment, job creation and new tax revenues, but also wider economic competitiveness, digital sovereignty and attracting broader tech-driven investments.

1.2.1 Data centres generate value for the economy

The European data centre market was valued at $47 billion in 2024 and is projected to reach $97 billion by 2030. The International Monetary Fund estimates that between 2025 and 2030, an AI boom can increase the average annual growth rate of global GDP by 0.5 percentage point, but this is dependent on the timely deployment of data centre infrastructure.

In the Netherlands, the data centre and cloud industry is already responsible for 20% of all foreign direct investment (FDI) – making it the largest sector when it comes to FDI. In Germany, data centres are estimated to have contributed €10.4 billion to GDP in 2024, both directly and indirectly. This amount is expected to more than double to €23 billion by 2029. Similarly positive data comes from Norway, where data centres are estimated to have added €240 million to the economy in 2023 – more per unit of consumption than the traditional power-intensive industries such as the production of chemicals. The UK government claims that embracing AI will “lead to more money in the pockets of working people” and boost productivity by 1.5 percentage points every year, yielding €55 billion of added value annually over the next decade. The Irish government similarly believes that data centres play an “indispensable role in our economy and society”.

Jobs are at stake as well. The Netherlands is a key example of the job opportunities that are associated with investments from the data centre and tech industry. Dutch data centres directly and indirectly employed around 11,000 people in 2020. This sector is also fundamental to 109,000 jobs in the tech hub and 2.1 million jobs in the digital economy. Jobs across these sectors are equivalent to 27% of total employment in the Netherlands in 2020.

1.2.2 Competitiveness and data centres go hand in hand

Beyond direct investment and job creation, the data centre industry brings a range of additional economic benefits. As a key technology enabler, it is a major pull factor for IT companies and fosters digital ecosystems, enabling Europe to capitalise on emerging opportunities in AI and quantum technologies. Building new data centres requires industrial automation solutions, an area where European firms hold a competitive edge with over half of the global market share. Indeed, four European industrial groups that provide components for data centres added more than €150 billion to their market caps since November 2022, on the back of AI’s soaring demand for data centres. For one company, Siemens AG, this meant its market value grew by more than 60%.

Data centres also have a significant role to play in the EU’s wider energy security and competitiveness agenda and its drive for digital sovereignty. Many AI applications require high levels of security and data control, making the location of digital infrastructure a strategic concern. The EU has identified digital and data sovereignty a central priority, emphasising the need for infrastructure that ensures European data is stored, processed and governed under EU laws.

Data centres are already having an impact on Europe’s electricity demand, particularly in key markets. European data centres consumed an estimated 96 TWh of electricity in 2024, equal to 3% of the region’s total electricity demand. Among the top data centre markets, this ranged from 2% of national electricity demand in France, through 4% in Germany and the UK, to 7% in the Netherlands and 19% in Ireland. Their localised impact is even more significant. In 2023, data centres consumed 33% to 42% of all electricity in Amsterdam, London and Frankfurt – and almost 80% in Dublin. 

Data centre power demand in Europe is expected to grow to 168 TWh in 2030 and 236 TWh in 2035, representing an increase of almost 150% in just ten years. Some markets are expecting enormous, rapid growth. In Sweden, Norway and Denmark, data centre electricity demand is expected to triple already by 2030. This trend is projected to continue and spread to other countries in the following five years, with Austria, Greece, Finland, Hungary, Italy, Portugal and Slovakia projected to see data centre consumption increase by three to five times by 2035 compared to 2024.

Recent research confirms that data centres will be a major contributor to increasing power demand. In Europe, ICIS estimates that their share of electricity demand will grow from 3% to 4.5% in 2030 and 5.7% in 2035. Data centre demand growth between now and 2030 (72 TWh) is projected to be larger than that of electric vehicles (67 TWh) and comparable with electrified industry (80 TWh). At the global level, the IEA’s outlook also sees data centres as a strong contributor to power demand, adding more in absolute terms than heavy industry or building heating by 2030.

1.3.1 Despite expectations of high growth, forecasts show the EU falling short of its goal to triple data centre capacity

In its AI Continent Action Plan released on 9th April 2025, the European Union set a goal of at least tripling data centre capacity within the next five to seven years. Yet forecasts from ICIS, IEA, IMF and McKinsey show the EU falling short of that goal, suggesting that a doubling of capacity by 2030 is more probable instead.

The European data centre market has long been dominated by a handful of metropolitan hubs known as the FLAP-D markets: Frankfurt, London, Amsterdam, Paris and Dublin. Their historical appeal was driven primarily by proximity to major demand centres which meant fast data transmission.

Forecasts of growth, however, show the historical dominance of the FLAP-D markets beginning to erode. Growth is being forced to slow due to adverse impacts on the grid and congestion is causing data centre developers to move away from established hubs.

Currently, approximately 62% of Europe’s data centre capacity is located in the FLAP-D markets, but this is expected to drop to 55% by 2030, and 51% by 2035. Of these five core markets, only France, where grid remains relatively unconstrained, is expected to maintain continued data centre investment. In Ireland, the Netherlands and Frankfurt, grid operators have had to implement radical measures, effectively banning new data centres until at least 2030.

This suggests that grid infrastructure has become a critical factor influencing investment decisions, often outweighing other factors such as cost of land, economic incentives and attractive regulatory frameworks.

1.4.1 Growth is moving to markets with better grid availability

Growth outside the FLAP-D markets is expected to be far stronger over the next five years. Other countries will see data centre demand growth increase by 110% between now and 2030, double the rate in FLAP-D markets (+55%).

The Nordics top the list for data centre expansion. They have some of the lowest levels of grid congestion in Europe and offer the added benefits of low electricity prices and carbon intensity, inexpensive land and reduced cooling needs thanks to colder climates. The good state of the grid stems from intentional and deliberate planning choices. For instance, Norway’s TSO Statnett is planning for a tripling of data centres’ electricity demand by 2030 compared to 2022, and up to 15 TWh of data centre power consumption in 2050.

The Danish TSO Energinet was looking to position Denmark as a future data centres hub as early as 2017, building high voltage substations in preparation to connect data centres to the transmission grid. As a result, Denmark has been a top destination for data centre developments, with a huge capacity growth of 26% annually for the past five years. The trend is starting to slow as the grid becomes increasingly saturated in key zones, but is still expected to maintain an impressive 12% annual growth over the next five years.

Belgium is also expected to see strong growth in the next five to ten years, with data centre demand increasing by 72% between 2024–2030 and a further 42% between 2030–2035. Data centre trends have been consistently monitored by the TSO and incorporated into its grid development planning, enabling forward-looking network expansion that paves the way for such investments.

Belgium’s grid preparedness has been a major pull factor for developers, to the extent that its system operators, Elia (TSO) and Fluvius (DSO), recently raised concerns over the sharp increase in grid connection applications submitted for new data centres in Flanders. In response, the grid operators are working in consultation with the Flemish government to optimise the location of new data centres to alleviate grid congestion concerns. The surge in applications for very high capacities appears to be related to grid conditions in the Netherlands and Germany which are causing project developers to turn to Belgium where grid availability remains more accommodating for now.

This highlights an important developer trend. Major industry players will not wait for the necessary infrastructure to be built – they will just move to where it is readily available. Indeed, EirGrid flagged its concerns to the Irish Government last year over a potential “mass exodus” of data centres, warning that technology companies will look elsewhere if they cannot connect to the grid. Well planned grids have become a key trigger for economic activity and investments, while unprepared grids have become a barrier.