FILE PHOTO: A specialist works at high voltage power lines near Kaarst, Germany, July 27, 2022. REUTERS/Wolfgang Rattay/File Photo
PARIS (Reuters) -Europe's leading data centre hubs face a major shift as developers will go wherever connection times are shortest, unless there is more proactive electricity grid planning, a report on Thursday by energy think-tank Ember showed.
Data centre buildout has exploded in recent years as tech companies race to put together the strongest offering of competitive artificial intelligence (AI) models, which rely on a new generation of power-hungry data centres.
This could lead to a geographical shift in investment in Europe as developers look for new places with easier power access and shorter lead times, the report said.
By 2035, half of Europe's data centre capacity could be located outside the current main hubs Frankfurt, London, Amsterdam, Paris and Dublin, the report said.
This could leech billions of euros in investments from the congested countries, as data centres in Germany contributed 10.4 billion euros ($12 billion) in GDP in 2024 which should more than double by 2029, and it could slow job growth, it said.
Only France, is expected to maintain continued data centre investment as the grid remains relatively unconstrained, the report said.
Connecting a new data centre to the grid in legacy hubs can take an average of 7–10 years, with some projects facing delays of up to 13 years, the report said.
However, wait times in newer markets are much shorter, with Italy taking just three years, it said.
"Grids are ultimately deciding where investments go ... they are now effectively a tool to attract investment," said Elisabeth Cremona, Senior Energy Analyst at Ember.
"In Europe's push for competitiveness and economic growth, it now needs to be taking into account grids and driving investment to that infrastructure if it wants to see other projects materialise," she said.
She added that this is not unique to data centres but covers all industry, as any kind of industry that is either new or looking to electrify is going to go through the same process.
In Sweden, Norway and Denmark, data centre electricity demand is expected to triple already by 2030. In Austria, Greece, Finland, Hungary, Italy, Portugal and Slovakia data centre consumption is projected to increase by three to five times by 2035 compared to 2024.
($1 = 0.8692 euros)
(Reporting by Forrest Crellin; editing by David Evans)
