IEA Warns Europe Must Upgrade Energy Systems As New Data Centres Could Reach 10% Of Peak Demand In Spain And The Netherlands And 4–5% In Germany And France

Europe has long been a major centre for data centre development. In 2015, the region held more than a quarter of global data centre capacity. However, over the past decade, data centre growth in the United States and China has accelerated more quickly, reducing Europe’s share of global capacity to about 15% in 2024. During this period, Europe’s data centre market expanded at roughly half the global average growth rate. In response to this shift, the European Commission introduced the AI Continent Action Plan in April 2025. One of its key goals is to triple the European Union’s total data centre capacity within five to seven years.

By doing so, the EU aims to strengthen its digital infrastructure, position itself more competitively in the global AI industry, and reinforce its economic stability, technological progress, digital sovereignty and strategic autonomy. Achieving this goal will require cooperation between governments and private companies across multiple sectors. Energy, in particular, will play a central role, as the region is already seeing signs of strain in its electricity systems. This commentary focuses on Europe’s data centre market and forms part of the International Energy Agency’s wider work on energy and artificial intelligence. Insights on this topic also appear in the IEA’s World Energy Outlook 2025.

When a data centre is built, it adds a large, concentrated demand for electricity. Although data centres themselves can be constructed in one to two years, expanding electricity infrastructure to support them often takes much longer. Most data centres are located near major cities, where local grids are already under pressure. Currently, the majority of Europe’s data centre capacity is located in a handful of major hubs: Frankfurt, London, Amsterdam, Paris and Dublin, commonly known as the FLAP-D markets. Copenhagen and Milan are also becoming increasingly important. In recent years, both Dublin and Amsterdam have paused new data centre projects because of limited grid capacity and an inability to support additional large electricity loads. These cases illustrate the difficulty of expanding digital infrastructure when the energy system cannot keep up.

IEA analysis suggests that new data centre hubs are likely to emerge in regions such as Spain and Finland. Even so, most planned capacity is still concentrated in the existing major hubs, increasing pressure on already strained grids. At the same time, the average size of new data centre projects has grown considerably. In the Netherlands, the planned project capacity is more than three times the size of data centres currently operating. In Spain, planned projects are, on average, seven times larger. If all projects in the current pipeline were completed, they would significantly increase electricity demand in several countries.

In Germany and France, total data centre capacity could account for about 4% to 5% of peak electricity demand. In Spain and the Netherlands, the share could rise to around 10%. In smaller markets, the impact would be even more substantial. Despite these projections, predicting the actual effect on electricity demand is challenging. Not all planned projects will advance to completion. Even those that are built may take several years to reach full capacity, as the servers they house rarely operate at their maximum rating. Therefore, while the data indicates an important trend, exact outcomes may differ.

Electricity system limitations also pose a major barrier to project development. In the European Union, securing a grid connection can take anywhere from two to ten years, depending on the country. In the FLAP-D markets, developers face average wait times of seven to ten years. Grid congestion is a major contributor to these delays and is costly. According to the EU Agency for the Cooperation of Energy Regulators, direct grid congestion costs reached EUR 4.3 billion in 2024, and this figure does not include the economic impact of project delays. High costs and long wait times in the core markets are pushing data centre investors to consider regions with better grid availability.

Another concern for policymakers is electricity affordability. There is growing awareness that data centres must be integrated into the grid in a way that does not increase electricity prices for households and businesses. In addition, the data centre industry depends on complex global supply chains involving critical minerals, computing equipment, and energy components such as transformers and batteries. Disruptions in any of these areas could slow the sector’s growth. Electricity consumption in Europe is expected to increase for several other reasons as well, including the electrification of transport and heating, growth in industrial activity, and rising cooling needs in certain regions.

Based on current policies, the IEA estimates that data centres will represent about 10% of the EU’s electricity demand growth through 2030. Data centres pose unique challenges because of their size, rapid development timelines, and tendency to cluster in specific locations. To triple Europe’s data centre capacity, the region will need to adopt proactive and coordinated measures. Current project announcements represent about 130% of today’s installed capacity, but the IEA projects that by 2030, actual installed capacity will grow by only about 70% compared with 2024 levels. This slower growth is partly due to delays and local constraints such as grid congestion.

To support large-scale data centre development and integrate these facilities into Europe’s energy systems effectively, a strong policy framework is required. Streamlining project approval processes and improving grid connection queue management can help ensure that ready-to-build projects move forward quickly. Non-firm grid connections, where facilities accept occasional limits on their power use, could help accelerate connections in areas with limited capacity.

Locating new data centres in regions with available grid capacity should also be prioritised. Smart grid technologies can improve the efficiency of existing electricity networks, and on-site energy solutions such as battery systems can reduce dependence on the grid during peak periods. Long-term investment in transmission infrastructure and coordinated grid planning will also be essential to meet rising demand. Taken together, these actions can help Europe expand its digital infrastructure while continuing to reduce emissions, maintain energy security and ensure that electricity remains affordable for consumers.