Overcoming energy constraints is key to delivering on Europe's data centre goals

Vincent Jacamon, Junior Modeller & Julie Dallard, Junior Modeller
Thomas Spencer, Senior Energy Analyst

Commentary — 16 November 2025

Europe is looking to expand its data centre sector…

Europe has historically been a hub for data centre deployment. In 2015, the region accounted for more than 25% of global data centre capacity. However, faster growth of both the American and Chinese markets over the past decade has reduced Europe’s global share, which stood at 15% in 2024. The European data centre market grew at around half the average rate worldwide over this period.

To respond to this trend, the European Commission launched an AI Continent Action Plan in April 2025. Within this framework, the Commission set a target of tripling data centre capacity in the European Union in five to seven years. By strengthening its digital infrastructure, the EU aims to secure a stronger position in the global AI sector and safeguard its economic competitiveness, technological innovation, digital sovereignty and strategic autonomy.

Meeting this target will require strong coordination between the public and private sectors across a range of domains. But attention to energy will be particularly important, with signs of strain already appearing today.

This commentary, which zooms in on the European market for data centres, is part of the IEA’s comprehensive work programme on energy and AI. Fresh analysis on this topic can also be found in the IEA’s recently published World Energy Outlook 2025.

… but energy challenges must be addressed

When a data centre is built, it means adding a large and concentrated source of demand for power. However, while a data centre typically takes one to two years to build, much longer lead times are needed to expand electricity infrastructure. Data centres also tend to cluster close to urban areas, where the local grids are often strained.

Today, most installed data centre capacity is concentrated in a few hubs across Europe: Frankfurt, London, Amsterdam, Paris and Dublin (often referred as FLAP-D). Copenhagen and Milan also play increasingly significant roles. In recent years, Dublin and Amsterdam have had to pause new projects, citing the lack of grid availability and the inability to integrate new large power loads. This highlights the challenge of expanding data centre capacity in the face of energy sector constraints.

The IEA’s analysis of project announcements indicates that new data centre hubs in the region are set to emerge in coming years, including in Spain and Finland. However, most announced capacity in Europe is still planned for existing hubs, potentially increasing the pressure on grids there. At the same time, the average project size is growing significantly. For example, in the Netherlands, the average capacity of planned data centre projects is more than three times larger than the average capacity of data centres in operation today. In Spain, planned projects are seven times larger on average.

If the project pipeline for data centres in the region is fully realised, it would represent substantial additional power loads in some cases. In large countries like Germany and France, fully implementing the project pipeline would see the installed capacity of data centres climb to represent around 4-5% of peak electricity demand today. In countries like Spain or the Netherlands, it would rise to around 10%. And in smaller electricity markets, the share of data centres in peak demand would be even larger.

Understanding power sector implications is a complex task

However, several factors make it difficult to project what the actual impacts on peak demand and annual electricity consumption will be.

Not all the projects from the current data centre project pipeline will be completed. Even those that are finished may take several years to fill up with operating servers – and these servers do not typically hit their maximum rated capacity. Given this, while the data above gives an indication of the direction of travel, care should be taken in interpreting the exact numbers.

Electricity system constraints may slow the realisation of planned projects. Within the European Union, wait times for securing a grid connection can range from two to ten years, depending on the country. In the “FLAP-D” data centre hubs, developers face queues to obtain a connection that average seven to ten years. A major driver is grid congestion, which can come with major costs. According to the European Union Agency for the Cooperation of Energy Regulators (ACER), direct grid congestion costs amounted to EUR 4.3 billion in 2024 – and this did not factor in indirect costs, such as include the economic consequences of project delays. Expensive delays in core markets are prompting data centre investors to look toward regions with more available grid capacity.

Concerns over electricity affordability are also front and centre for policymakers, with a growing recognition that data centres must be integrated into electricity systems in a manner that does not lead to price rises for consumers. Additionally, the supply chain for data centres is complex and international, relying on critical minerals, computing hardware and energy components such as transformers and batteries. Bottlenecks or restrictions in these supply chains could also hold back the growth of the data centre sector.

In the meantime, Europe’s electricity consumption is projected to grow in the coming years for other reasons, including the electrification of heating and transport, a recovery in manufacturing output, and – in some parts of Europe – greater cooling needs. According to IEA modelling, data centres are expected to account for 10% of electricity demand growth in the European Union to 2030 based on today’s policy settings.

To speed up data centre deployment, policies are needed to tackle energy bottlenecks

Nonetheless, as noted above, data centres represent a unique challenge due to their size, the speed of development and their spatial concentration. If Europe is to meet its goal of tripling data centre capacity, proactive measures are needed. Based on IEA analysis, the capacity implied by the project pipeline is around 130% of installed capacity today. However, by 2030, according to IEA modelling, installed capacity in Europe is projected to grow by just 70% compared with 2024, in part due to delays and local constraints such as grid congestion.

Supporting a large build-out of data centres and ensuring they are smoothly integrated into Europe’s energy systems will require a coordinated set of policies. Simplifying project pipelines and improving grid connection queue management can prioritise ready-to-build projects, thereby streamlining grid connections. In addition, non-firm grid connections, where users accept potential curtailment under specific conditions, would help accelerate grid connections in places with constrained grid capacity.

On the other hand, siting data centres in areas with spare grid capacity should also be prioritised. And smart grid technologies can help to maximise available grid capacity, while on-site power assets, such as battery systems, can ease reliance on wider electricity networks during periods of high demand. Finally, sustained investment in transmission infrastructure and closer coordination in grid planning are essential to meet the growing demand for transmission capacity.

Together, these actions can better align the rapid expansion of digital infrastructure with Europe’s goals of reducing energy sector emissions, maintaining electricity sector security, and strengthening affordability for consumers.