18 Dec
The FLAP-D region (Frankfurt, London, Amsterdam, Paris, and Dublin) remains a leader in the European data center market, attracting the industry’s largest investments. However, major changes in recent years have accelerated development in countries like Spain, Greece, Italy, and Sweden, driven by growing concerns about energy consumption
For example, in the Netherlands, the government imposed a 9-month moratorium on permits for data centers larger than 10 hectares. Similarly, this summer, the South Dublin County Council rejected Google’s application to build a new data center, citing concerns about the energy demand on the Irish grid and the lack of on-site renewable energy sources. Changes have also emerged in Germany, the first country to adopt dedicated data center legislation. Starting January 1, 2024, all data center operators in Germany must cover 50% of their energy consumption with unsubsidized electricity from renewable sources. Additionally, Germany mandates a PUE of 1.5 or lower starting July 1, 2027 (and a PUE of 1.3 starting July 2030).
In this context, we have analyzed the main programs, strategies, partnerships, and projects at the European level to understand better how countries outside the FLAP-D region are adapting to this new reality.
Greece, balancing red tape and digital transformation
Greece benefits from investments by Amazon, Google, Digital Realty, and Microsoft, which promise to create thousands of jobs and transform the country into a major data center hub in Europe. In 2023, Microsoft announced a $1 billion investment plan to build a campus of three data centers, located 1.5 kilometers north of Sparta. Similarly, Google plans to build its data centers in Athens by 2030. Unfortunately, many investors face challenges with Greek bureaucracy: Microsoft reportedly needed four years to obtain construction permits for its first data center in Greece (Spata), according to the online publication ekathimerini.com.
How did Greece achieve these milestones? Key factors include its strategic geographic location (connecting Europe to Africa, the Middle East, and Asia, by extension), economic and political stability following a decade-long economic crisis, improved infrastructure, and a highly skilled workforce.
In addition, Greece’s Digital Transformation Strategy for 2020-2025, also referred to as the ‘Digital Bible’, prioritizes digitalization, including the development of digital skills in Greek society at all levels and age groups. The strategy is complemented by projects aimed at mainstreaming the integration of digital technologies in various sectors of the economy and transforming companies into digital enterprises.
Moreover, at the beginning of 2024, the UAE Ministry of Investment and the Hellenic Ministry of Digital Governance signed a Memorandum of Understanding (MoU) to develop data centers with a total capacity of 500 megawatts. () Additionally, in 2021, Greece received €4 billion in pre-financing from the EU, part of which is allocated to help SMEs adopt digital technologies. Complementing these efforts are Greece’s initiatives to establish Free Trade Zones and Special Economic Zones, creating an attractive environment for investors.
Italy is betting on small modular reactors (SMRs)
In October 2024, Italy’s Minister of Enterprises, Adolfo Urso, announced that the country had been chosen as the location for a €30 billion investment in data centers by a foreign corporation, though no further details were provided. Just a month before this announcement, Italian Prime Minister Giorgia Meloni met with Larry Fink, CEO of the American multinational investment company BlackRock, to discuss potential investments in data centers and supporting energy infrastructure. The two agreed to set up a panel to explore possible future infrastructure projects.
American hyperscalers Microsoft, Google, Amazon, and Oracle already have data centers in Italy – Microsoft plans to invest an additional €4.3 billion to expand its cloud and AI infrastructure in the country. Meanwhile, Amazon will invest €1.2 billion over the next five years to expand its data center business in Italy.
However, the higher electricity prices in Italy compared to competing European countries remain a challenge. To address this, the Italian government plans to introduce a new legislative framework by the end of 2024, which will support the construction of small modular reactors (SMRs). The long-term goal is to turn nuclear energy into a cornerstone of the “Made in Italy” brand.
Another problem Urso acknowledges is Italy’s IT skills shortage. Microsoft is contributing to addressing this by aiming to train over a million Italians by 2025, with a focus on AI fluency and business transformation through AI. Microsoft plans to achieve this goal through collaboration with industry partners, universities, nonprofit organizations, government institutions, and others.
It is also important to remember that Italy has been a pioneer in European sovereign cloud initiatives. For example, the Cloud Italia strategy includes guidelines for the migration of public administration to the cloud. These initiatives are driving the evolution of the cloud industry in the country.
Norway: a model of collaboration with local data center operators
The development of the data center industry in Norway is based on competitive advantages such as the cold climate year-round, political stability, and the availability of renewable energy. Earlier this year, Google announced plans to build a €600 million data center (240 MW) in Skien, Norway, by 2026. This is a sign that the Norwegian government’s efforts to position Norway as an attractive country for data center operators have paid off.
In 2018, Norway launched its own data center industry strategy (updated in 2021), which was the first of its kind globally. In January 2024, the Ministry of Digitalization and Public Governance was created, responsible for digitalization and the data center industry. Additionally, Norwegian authorities are working on updating laws and regulations to address the rapid digitalization of society, a process actively supported by the Norwegian data center industry. For example, the Electronic Communications Act (Ekomloven) is being updated to regulate the data center industry as a facility related to electronic communications networks and services.
In December 2023, the Norwegian government rejected the recommendation of the country’s National Security Authority to develop a state cloud, opting instead for a national cloud solution operated in collaboration with commercial players. This decision highlighted the authorities’ trust in the Norwegian data center industry.
Sweden and Finland: champions of low-cost electricity
In June 2024, Microsoft announced that it would allocate $3.2 billion to expand its data center capacity in Sweden. This announcement comes three years after the launch of the first Azure region and the first data center cluster in the country. As part of the project, similar to Italy, Microsoft will prioritize training 250,000 people in AI by 2027.
At a press conference held alongside Swedish Prime Minister Ulf Kristersson, Microsoft President Brad Smith stated that the main reason for the company’s investment was Sweden’s “forward-looking energy policy, the plentiful access to green energy, whether it’s carbon-free energy or renewable energy”.
Finland is not falling behind: in November 2024, Google purchased 1,400 hectares worth €27 million in Kajaani, a town that hosts Europe’s most powerful supercomputer, LUMI. Finland and Sweden stand out for having the cheapest electricity in Europe, according to Finnish Energy statistics. In 2023, the average electricity price was €56.47/MWh in Finland and €51.70/MWh in the Stockholm area. In comparison with Central Europe, the difference is significant: in Germany, the price was €95.18/MWh, and in Ireland, it reached €131.62/MWh.
But Finland has gone even further – two years ago, it reduced the electricity tax for small data centers to the minimum level allowed by the EU. To benefit from this reduction, one of the requirements is the efficient use of residual heat. As a result, the residual heat from the LUMI supercomputer meets 20% of the annual heating needs of the city of Kajaani in Finland. Similarly, Microsoft uses the residual heat from its data centers in Helsinki to supply approximately 40% of the centralized heating needs of the Espoo area. It is also worth mentioning that Finland has the most advanced district heating network in the world, which enables the efficient transfer of residual heat generated by data centers.
Sweden and Finland stand out for their access to renewable energy (hydropower, wind, solar, and nuclear), the reliability of electricity supply, the fast approval of projects compared to other countries, extremely low seismic risk, and the high availability of IT specialists.
Denmark, a leader in renewable energy
In October 2024, NVIDIA CEO Jensen Huang and King Frederik X of Denmark inaugurated the country’s first AI supercomputer, Gefion. It includes over 1500 NVIDIA H100 Tensor Core GPUs, operated by the Danish Center for AI Innovation (DCAI) and funded by the Novo Nordisk Foundation, one of the richest charitable foundations in the world, alongside the Export and Investment Fund of Denmark, the national bank of Denmark. In its initial phase, Gefion will serve public and private organizations looking to use AI for advancements in quantum computing, energy efficiency, weather forecasting, and the medical field.
Another major project was announced in September by atNorth, which plans to build its largest data center in Ølgod, Varde, Denmark. It will cover 174 hectares, with an initial capacity of 250 MW, and will be equipped with advanced technology allowing the reuse of residual heat in homes and industrial greenhouses. atNorth operates 7 other data centers across the Nordic countries. Also in September, Penta Infra announced plans to build a data center spanning over 20,000 sqm with an IT capacity of 20 MW in Copenhagen.
Denmark’s strategy for the data center industry, which has established Copenhagen as a leading European hub, is based on its position as a global leader in renewable energy and energy security.
Accelerated growth of Spain’s data center industry
As Manuel Giménez, the executive director of Spain DC, the Spanish data center industry association, said, the Spanish sector is experiencing the fastest growth in Europe. In 2023, Madrid accounted for 61% of the industry (147 MW IT), followed by Barcelona with 14.4% (34.9 MW IT), and Aragón with 37.2 MW IT. According to the same Spain DC, by 2026, Spain could increase its installed capacity by up to six times, surpassing 600 MW. This growth will bring it closer to the major European markets in FLAP-D.
Spain stands out for its strategic position as a connection point for submarine cables linking Europe to Latin America, the United States, Africa, and the Middle East, which stimulates the growth of connectivity providers. Additionally, its location offers a high level of solar radiation, ideal for generating renewable energy. With access to green energy, developed telecommunications networks, a strong technology industry, digital talent, and innovation capacity, Spain has established itself as a top European technology hub and an ideal destination for data center investments.
Hyperscalers soon followed: two years ago, Google decided to open a cloud region in Madrid, which came with a five-year investment plan (€650 million) and includes critical infrastructure projects like the Grace Hopper submarine cable, which connects Spain to the USA and UK. In 2022, Amazon launched a cloud region in Aragon, and in 2024, it announced new investments of €15.7 billion. The plans include the construction of four wind farms and eight solar power plants. In turn, Microsoft announced it would quadruple its investments in AI and cloud infrastructure in Spain between 2024 and 2025, reaching $2.1 billion. Read more, here. To support this growth, the Spanish government plans to increase investments in the development of energy transport network infrastructures.
How is the situation evolving in Romania?
In Romania, there are approximately 130 data centers, most of them concentrated in Bucharest, Cluj-Napoca, Timișoara, and Craiova. Their capacity covers only 3.2 W per capita, far below the average of Nordic countries, which reach 22.6 W, and below the average of Central and Eastern Europe (4.5 W). However, Romania is approaching the performance of Nordic countries in terms of the PUE (Power Usage Effectiveness) index, with an estimated average of 1.37, according to a Crosspoint Real Estate study. The Romanian data center industry benefits from advantages such as access to well-trained IT specialists and abundant renewable energy sources, including wind, hydro, and solar power. Data centers in Romania are small compared to the global market. However, there are a few that stand out due to their integrated technologies and specialization (ClusterPower, Orange Business Solutions, NXDATA, M247, StarStorage, GTS, etc.). Additionally, new projects have been announced by companies such as Portland Trust and Infinity Cloud Technologies.
In recent years, there have been negotiations with representatives of Google, Microsoft, and Amazon to build large-scale data centers in Romania, so far it seems that they have not advanced beyond the stage of discussions.
For the public sector, in April 2024, the Romanian state signed a contract with Vodafone worth 418.7 million lei for the development of the governmental private cloud infrastructure. The project is funded through the National Recovery and Resilience Plan (PNRR) – Component 7 Digital Transformation and includes multiple data center facilities, which will complement those already existing at ICI, ONRC, MAI, and other institutions.
Conclusion
Although Romania has national strategies in multiple areas (Digitalization, AI, Quantum Computing) there is no coherent approach to the data center sector and no concrete measures to catalyze the field. We see that countries that are accelerating their development in the data center industry are focusing on key components such as: developing the digital skills of the society, improving infrastructure (including energy transport networks), eliminating bureaucracy, investing in alternative/renewable energy sources, working with local data center operators to adapt legislation, reducing electricity taxes for the data center industry and efficient use of waste heat. All these are often integrated into coherent, long-term national digital transformation strategies.
We hope that the authorities in Romania will take inspiration from the example of these countries and learn how to better capitalize on the opportunities in the data center sector, a global industry currently valued at around $324 billion, but expected to surpass $436 billion by 2028.
