Data centers have run out of “plugs” in central Europe, so they are migrating north and south

The insatiable appetite of Artificial Intelligence (AI) is redrawing the map of Europe. Historically, the European data center market has been dominated by a handful of metropolitan areas known in the industry as the “FLAP-D” markets: Frankfurt, London, Amsterdam, Paris and Dublin.

The main attraction of these cities was their proximity to large demand centers, which allowed extraordinarily fast data transmission. However, current forecasts indicate that this historical dominance is beginning to crumble. Technology developers are packing their bags and the reason is purely physical: there is not enough energy.

The collapse of the giants. The driving force behind this technological exodus is the sheer congestion of the electrical grid in the traditional epicenters. Unlike a conventional factory, data centers present a brutal challenge for any infrastructure: they are huge, hyper-localized loads that operate tirelessly and have the ability to skyrocket their consumption faster than almost any other industry.

The local impact of these installations is astonishing. According to Greenpeacein 2023 data centers consumed between 33% and 42% of all electricity in cities such as Amsterdam, London and Frankfurt. The most extreme case is that of Dublin, where they accounted for almost 80% of electricity consumption. The situation became so critical that Ireland was forced to impose a moratorium de facto to new data centers in its capital until 2028.

The exodus to the North and South. As a direct consequence of this bottleneck, the proportion of installed capacity in FLAP-D markets will fall from the current 62% to just 51% by 2035. according to a report by Ember. This drop marks the beginning of a new era in which developers flee from bottlenecks.

The new map would look like this:

• The big winners: The Nordic countries top the expansion list. They offer some of the least congested networks in Europe, low electricity prices, minimal carbon intensity and cold climates that reduce the need for cooling. Demand is expected to increase 4 or 5 times in this region.
• The awakening of the South: On the other side of the continent, countries such as Greece, Italy, Portugal and Spain also project explosive growth, driven by their potential in renewable energy.
• The laggards: There are nations that, despite having strong economies and plenty of IT talent, are falling behind. Poland and Czechia are the best example. As detailed by Paweł CzyżakDirector of the Europe Program at the analysis center Embertheir electrical systems are still tied to coal and gas (Poland emits about 600 gCO2/kWh and the Czech Republic about 400 gCO2/kWh). With no clean energy to offer, investors prefer to look to their greener neighbors.

Don’t underestimate the south. While the north squeezes the Scandinavian cold, Spain faces this exodus from a privileged position, breaking daily renewable generation records. However, its electrical network suffers a serious administrative “thrombosis”: There is plenty of clean energy, but there is a lack of cables to transport it, leaving 130 GW trapped in a bottleneck.

Faced with the avalanche of data centers that threatened to collapse the system, the Government and the CNMC They have applied emergency surgery. The solution involves pioneering “flexible access permits” – which allow these plants to use residual capacity by accepting outages in emergencies – and the non-negotiable requirement that they withstand “voltage gaps” to shield the electrical stability of the entire peninsula.

Planning and more planning. None of this happens by chance. In places where the network flows smoothly, there are years of work behind it. The Norwegian operator, Statnett, has been preparing the ground for some time to assume three times the electricity demand from data centers by 2030. In Denmark, Energinet began building high-voltage substations in 2017 in anticipation of precisely this scenario.

Beyond the cables, the internal technology dictates the sentence. The key indicator is the PUE (Power Usage Effectiveness), which measures the technical efficiency of each installation. Paweł Czyżak points out in your newsletter that the difference is abysmal: the leading centers consume 24% less electricity and emit four times less CO2 than an average plant. Google has the best student in the class in Fredericia (Denmark): it averages a spectacular PUE of 1.07 and runs on 91% clean energy.

The technological paradox. There is, however, a fascinating irony in the background: the same Artificial Intelligence that today saturates the cables could be the salvation of the electrical system. According to calculations by the consulting firm Deloittethe efficiency improvements that this technology will bring will save more than 3,700 TWh globally by 2030.

Put into perspective, the deployment of these algorithms will save almost 4 times the energy consumed by all the data centers on the planet combined. Examples from other latitudes support this theory: in Southeast Asia (ASEAN), It is estimated that integrating AI in the management of its electrical systems it will save more than 67 billion dollars and avoid the emission of almost 400 million tons of CO2 between now and 2035.

Infrastructure decides the future. At the bottom of this complex puzzle of cables and algorithms, what is at stake is pure and simple economic competitiveness. They are not minor figures. In the Netherlands, the data and cloud sector already attracts 20% of all foreign direct investment. In Germany, estimates calculate that the contribution of these centers to GDP will jump from the current 10.4 billion euros to more than 23 billion in 2029.

The warning for legislators and regulators is clear: the technology giants have no patience to wait for new cables to be buried. They will move their billions to where the network already has space. As Czyżak saysthe country that wants to seduce the industry must guarantee clean energy in abundance and plugs ready to use. In the frenetic race to dominate the technological future, having a ready electrical grid is no longer an advantage; It is the only entry ticket.

Image | İsmail Enes Ayhan on Unsplash and IRENA

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