Since the energy crisis began, the EU has seen the sale of three million heat pumps, three million electric cars, and approximately 500 MW of electrolysers, contributing to a 1.3% increase in electricity demand from 2021 to 2023. Projections from Eurostat suggest that by 2050, electricity will account for around 60% of all energy demand. Within this broader shift, data centres occupy an increasingly visible role. In Europe, energy consumption from data centres accounts for 1% to 18% of national electricity consumption. In large conurbations, it can make up between 33% and 42% of electricity in Amsterdam, London, and Frankfurt, and circa 80% in Dublin.

Globally, the trajectory is clear. The International Energy Agency (IEA) projects that demand from data centres will more than double by 2030. AI will be the most significant driver of this increase, with electricity demand from AI-optimised data centres projected to more than quadruple by the end of the decade.

Meeting these requirements will depend on the resilience of electricity grids. Distribution networks are now a central concern, as they provide the foundation for the entire transition. Approximately 30% of today’s European grid is over 40 years old, with some components much older. EY estimates that an annual investment of €67 billion will be required to build or upgrade the grid to support the energy transition. The ability of countries to mobilise this investment will determine the pace at which new projects can be accommodated.

Against this backdrop, several governments initially responded to the surge in large data centre projects by tightening controls, delaying, or even refusing planning permissions, particularly across the FLAP-D markets. However, currently, overall attitudes toward data centre planning have improved across Europe, largely thanks to the substantial investments and economic benefits they bring; the shift has been most striking in London and Paris. Over the past year, both governments have formally recognised data centres as critical infrastructure, prompting a clear reversal in planning sentiment and greater political support for new developments.

The industry has responded with a strong focus on sustainability. A clear example is the Climate Neutral Data Centre Pact, a voluntary initiative launched in 2021 by leading operators and cloud providers. Its objectives include improving energy efficiency, transitioning to 100% renewable energy, reducing water consumption, promoting circularity by reusing and recycling equipment, and reducing greenhouse gas emissions.

Additionally, progress on efficiency has been tangible. Koomey’s Law, which observes that the energy required to perform a fixed amount of computation halves approximately every two and a half years, has underpinned improvements in the sector. In practice, efficiency gains have been achieved through advances in server architecture, cooling technologies and system optimisation. The Power Usage Effectiveness metric has steadily improved, with the European average falling from 1.74 in 2005 to 1.25 today. AI is being applied to data centre management, with AI tools increasingly used to analyse cooling systems, identify inefficiencies, and implement more effective strategies, thereby generating additional energy savings.

The sourcing of renewable energy is another critical element. Across EMEA, the share of renewables in total electricity generation has increased from 26% five years ago to 33% in 2024, with Europe leading the way toward greener energy production, accounting for 42% of the total electricity generation, according to Ember.

Another area of innovation is the reuse of waste heat. Data centres convert a large share of their electricity into heat, much of which has traditionally been released into the atmosphere. Increasingly, operators are exploring ways to recover and repurpose this heat for industrial, commercial or residential use. Legislative developments are reinforcing this trend. Under the recast Energy Efficiency Directive (EED), EU Member States must ensure that data centres with an IT capacity of 1 MW or more integrate waste heat recovery, unless it can be demonstrated that doing so is technically or economically unfeasible.

Electricity constraints are also encouraging developers to consider alternative approaches to site selection. Brownfield locations, particularly those with existing industrial infrastructure, are attracting growing attention because they often come with established grid connections. In Finland and Sweden, for instance, old paper mills and industrial plants have been converted into data centres, taking advantage of their reliable power supply and cooling potential.

At the same time, operators are increasingly exploring on-site energy production to secure capacity and enhance sustainability. Solar power is a common option: Google’s Belgian campus includes a 2.8 MW ground-mounted solar array, while in Spain, Best Wonder Business is planning a €230 million facility with 16 MW of capacity powered by nearby solar farms. Other solutions include fuel cells, such as a project in Ireland that will run entirely on gas-powered cells. More experimental approaches are also under consideration, with companies such as Data4, Equinix and Bahnhof assessing small modular nuclear reactors, and hydrogen emerging in industry discussions as a potential long-term option. These strategies remain largely the preserve of hyperscale operators, given the high levels of investment required.

Despite the progress being made, challenges will remain in the years ahead. The rapid development of AI applications is expected to accelerate demand for data centre capacity, increasing the urgency of finding reliable and sustainable energy solutions. According to a March 2025 survey by the European Data Centre Association, more than 75% of respondents identified access to power as the single greatest challenge for the industry over the next three years, even as they signalled a willingness to invest in alternative solutions.

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