Why Data Centers Are Moving Away From Europe’s Biggest Hubs

0:01 Global investment in data centers reached record highs in 2025,

0:06 with deals totaling more than $61 billion.

0:10 The speed at which private capital has moved

0:12 into the data center and AI space is unprecedented.

0:15 And that growth is only expected to continue.

0:18 McKinsey expects that, by 2030,

0:20 data centers will need $6.7 trillion in investment

0:24 to keep pace with demand for compute power,

0:27 with about 70% of that demand expected to come from AI workloads.

0:31 Data centers essentially form the backbone of the internet.

0:34 We're not just talking about AI, we're also talking about the apps you use.

0:37 Data processing is basically the brains of our digital civilization.

0:42 The government relies on it, the industry relies on it, logistics, everything.

0:47 As data centers’ electricity demand worldwide is expected to double by 2030,

0:52 providers are already citing access to power as a top concern.

0:56 If I take our data center in London, for example, we had our power connection,

1:00 a firm offer, and it was then moved by a decade.

1:03 So, how can you move forward

1:04 into a multibillion-pound project with a customer contract.

1:09 Across Europe, major hubs like London have

1:11 become saturated and are increasingly facing restrictions.

1:14 So where to build?

1:16 We're currently building out projects in Madrid in Spain,

1:19 and also in Seinäjoki in Finland.

1:21 We're looking across the Nordics in particular,

1:23 where they have cheaper power and more readily available land.

1:26 And that demand isn’t just impacting local grids.

1:29 A lot of the data center construction is basically foreign direct investment.

1:34 So, it's large multinational companies investing in the Nordics,

1:39 and as they do that, their political weight also increases.

1:44 So how are data centers redrawing Europe’s grid map?

1:52 And what risks come with that shift?

1:58 “I want the future of AI to be made

2:00 in Europe.” Europe wants to become an AI powerhouse,

2:03 but in order to do that, it needs to have the infrastructure,

2:06 which means it needs to have these data centers housing these advanced

2:09 GPU chips and therefore being able to contribute to AI workloads.

2:13 In order to have those data centers, it needs access to power.

2:16 Data centers used to mainly be built where

2:19 the population and the industry are in Europe,

2:22 and that means in the center of the heart of Europe,

2:27 the so-called FLAP-D, Frankfurt, London, Amsterdam, Paris and Dublin.

2:31 They go to where electricity is available.

2:34 And now data centers are migrating to the edges,

2:37 on the one hand, to the Iberian Peninsula.

2:40 There's lots of renewable, cheap energy there.

2:42 And then the very other extreme of Europe, the Nordics, also cool air,

2:47 lots of renewables, wind, hydro and great quality grid as well.

2:52 While data-center power capacity is still growing in Europe’s traditional hubs,

2:56 newer markets like the Nordics and Southern

2:58 Europe are expanding at a much faster pace.

3:01 This reflects rising demand: countries with less grid congestion and shorter

3:05 connection wait times are expected to see

3:08 data-center demand grow at nearly double the rate of FLAP-D hubs by 2030.

3:13 There's an absolute appetite for secondary and even tertiary markets.

3:17 As data center operators look for cleaner and more available power,

3:21 interconnectors– the high-voltage cables linking national grids– are

3:24 playing a bigger role in moving electricity across borders.

3:27 Europe now has more than 400 of them,

3:30 making it the world’s largest interconnected grid.

3:32 But that system is under pressure.

3:35 In December 2025, the European Commission unveiled its

3:37 Grids Package to speed up permitting for energy infrastructure.

3:42 It estimates €1.2 trillion in investment will be

3:45 needed by 2040 to modernize the continent’s electricity networks.

3:49 In the Nordics, in Finland in particular, the grid, there is a lot of capacity.

3:53 But even here, there's starting to be sort of local constraints.

3:56 So, for instance, there was a case in Sweden

3:59 where a local bun bakery wanted to expand,

4:02 and they needed more access to the electricity grid.

4:06 And at the same time, a large data center project wanted access to the grid,

4:10 and the utility allocated it to the data center,

4:13 and the bun factory was unable to expand.

4:16 These facilities are getting bigger and bigger, increasingly over one gigawatt.

4:20 One gigawatt is an enormous amount of power for a single site,

4:24 equivalent to the average annual electricity

4:26 consumption of almost a million people.

4:29 In some areas, we're seeing operators face waiting times of five,

4:33 eight, sometimes even ten years to connect to the grid.

4:36 Take the U.K., for example, where last year,

4:38 companies applying to connect to the grid,

4:41 there was a 460% jump in applications in a six-month period.

4:45 In order to counteract that surge,

4:47 the government is considering a proposal whereby projects

4:50 that have more economic viability will get priority access,

4:53 and that includes data centers.

4:55 It's really interesting to contrast that example in the U.K.

4:58 with the Netherlands, where traditionally,

4:59 grid applications work on a first-come first-serve basis,

5:02 but now they're considering instead, why don't we give priority access

5:06 to other businesses that really need the power,

5:09 for example, a hospital or a local school?

5:11 The European Council says expanding the grid

5:14 will take both public and private money.

5:17 Traditionally, the electricity grid is considered a public

5:20 utility that should be funded from public money.

5:23 And then we have these questions, well,

5:25 should we use this much public money to build infrastructure,

5:28 which is then used by a small number of very large data center operators?

5:34 We're looking at ways of involving also private

5:37 money in investing in improving that grid capacity.

5:41 In fact, data center providers are

5:43 already reshaping national grids in several ways:

5:46 though financing, planning and even on-site power generation.

5:50 In Ireland, where data centers already

5:52 account for 22% of electricity consumption,

5:54 new grid-connection rules introduced in 2025 raised the bar.

5:58 Large-scale facilities now have to provide

6:00 their own generation or storage and meet

6:02 at least 80% of annual demand with new renewable projects in the country.

6:07 In 2026, digital infrastructure developer Pure

6:10 Data Centre Group partnered with power supply

6:12 solutions provider AVK to switch on Europe’s

6:16 first microgrid-connected data center in Dublin.

6:18 Effectively, we had a natural gas connection,

6:21 but we weren't able to get a grid connection.

6:23 And so, to ensure that we could meet our customer requirements,

6:26 creating a microgrid enabled us to move our project forward.

6:29 Here, we have gas generation, we have battery storage,

6:33 and we have HVO standby generation,

6:35 all layered together that's providing redundant,

6:37 continuous power to the data center.

6:39 If you just go with renewables,

6:40 you end up building a significant amount of renewables and a lot of batteries,

6:44 with the dispatchable power piece,

6:45 you have your main power source being renewables,

6:48 but in times where the wind isn't blowing and the sun isn't shining,

6:51 you're reverting to this microgrid.

6:53 For now, the microgrid operates independently of the main grid.

6:56 But eventually, it will need to connect.

6:58 When we do finally get a grid connection,

7:00 we will be able to offer dispatchable power.

7:02 It will be able to balance off the renewables

7:04 that were already on the grid in Ireland.

7:06 If you think back to the days,

7:08 go back 100 or so years, when electricity grids were first being formed,

7:12 they took a load of islanded, isolated assets in various villages and towns,

7:16 and they connected them together

7:17 and formed national grids in different countries.

7:20 We're almost going back to that sort of stage where you might end up

7:23 with these private grids being built out

7:25 because of the long ended-ness of power connections.

7:28 If we look at the evolution of preferences of the data center operators,

7:31 what used to be a number in the 5-10% range of people who are willing

7:36 to consider behind-the-meter solutions such as microgrids,

7:38 that number has almost doubled in the last 18 months,

7:41 and now 20% or more are considering the use of that.

7:45 The problem with requiring data centers

7:48 to be self-sufficient in terms of electricity

7:52 production is that that means they will

7:55 have to use quite small-scale electricity production.

7:58 For instance, in the U.S., they're using a lot of gas turbines.

8:02 The second element is the actual reliability of the system.

8:05 As we know, data centers like to operate with five nines reliability.

8:08 Achieving that in a microgrid system, while possible,

8:11 is difficult, just from a feasibility and technological standpoint.

8:14 From the point of view of planning

8:17 an industrial geography that's as energy efficient,

8:20 you really want to make sure that you're using renewables.

8:25 In Europe, a data center can take just one to two years to build.

8:29 But getting connected to the grid can take up to a decade,

8:33 which is why operators are working

8:35 more closely with utilities and energy developers.

8:37 Take Spain, for example, where Amazon Web Services and Microsoft have

8:42 signed long-term renewable power deals with Repsol.

8:44 These agreements help lock in electricity supply for major customers,

8:48 while giving developers like Repsol the revenue

8:50 certainty to finance new wind and solar projects.

8:53 The same is true in the Nordics,

8:55 and I think the same will start to happen even in other places like Poland.

8:59 You're also seeing investment going,

9:00 capacity expansion for the manufacturer of everything from gas

9:03 turbines to electrical equipment like transformers, switch gears, etc.

9:07 We're seeing a new type of investor come

9:10 in who's specifically interested in the microgrid itself,

9:13 not necessarily the data center build.

9:15 So, they're infrastructure funds who are looking to build, own,

9:18 and operate microgrids and supply power to the data centers.

9:21 So, who stands to benefit from Europe’s data center construction boom?

9:25 Some of the biggest winners could be European electrical equipment,

9:29 cooling and engineering firms, as well as utilities and grid operators.

9:33 Over the past year, shares in some

9:35 of Europe’s biggest electrification companies have climbed,

9:38 as investors bet on rising demand from data centers.

9:41 It was a very strong start to the year for ABB,

9:45 24% order growth, data centers up triple digit.

9:48 Take Schneider Electric for instance,

9:50 where data centers accounted for around 30% of its total orders in 2025.

9:55 At Legrand, they made up 26% of revenues,

9:58 and the company says that share could rise to as much as 40%.

10:03 Big tech and hyper-scalers are trying to adapt

10:05 their projects to suit the country of where they're going.

10:08 A really interesting example is Meta’s Odense data center project in Denmark.

10:11 In order to get that facility off the ground,

10:14 there was upgrades and investment that needed to happen.

10:17 That therefore contributed to investment in the grid.

10:20 That project also took place with a sort of waste heat-recovery program.

10:23 So that meant that excess heat from the data

10:26 center was then providing heat for residential buildings.

10:29 This is known as district heating,

10:31 and it’s widely used across the Nordics, especially in cities.

10:34 Data centers are becoming a growing source of that heat.

10:37 In the port city of Hamina in southern Finland,

10:40 waste heat from Google’s local data center is expected to cover

10:43 up to 80% of district-heating demand from the end of 2025.

10:48 But that growing interdependence also raises new questions around reliance,

10:52 control and digital sovereignty.

10:54 Nearby in Mäntsälä, Amsterdam-based Nebius had started

10:57 to recover heat waste for residential use.

11:00 Nvidia has just recently announced that they are investing $2

11:05 billion in a Netherlands-registered AI

11:08 computation data center company called Nebius.

11:12 Nebius was once Yandex N.V., the Dutch-registered parent company of Yandex,

11:17 one of Russia’s biggest tech companies.

11:19 After Russia’s invasion of Ukraine,

11:21 the company came under geopolitical pressure,

11:23 sold its Russia-based businesses and rebranded as Nebius in 2024.

11:28 In April 2022, their major data center in Mäntsälä,

11:33 Finland, which was heating the city, couldn't purchase electricity anymore,

11:38 and they had to basically power down most of the operations.

11:43 The data center had to run on diesel at reduced capacity,

11:46 and its contribution to the local heating system was disrupted.

11:50 The interesting thing is, not only as a result of computation moving northward,

11:55 not only do other countries become more dependent on the Nordics,

11:58 but also Nordics in terms of basic infrastructure,

12:02 like heating, become more dependent on computation from other countries.

12:07 Geography is really important when it comes to thinking about

12:09 where data centers are located and where the investment is going.

12:12 In a sort of ironic twist, one of the Europe's digital sovereignty AI compute

12:19 champions is actually a former Russian digital champion.

12:25 We have Nebius building further,

12:27 very large AI computation facilities in Eastern Finland,

12:31 quite close to the Russian border.

12:33 Also, Google's major data center complex in Finland, also,

12:37 hundreds of megawatts in terms of total peak capacity,

12:41 is located only about 40 kilometres from the Russian border.

12:46 As data centers migrate, the question is will these new areas of growth

12:50 see the same challenges that existed in those traditional markets?

12:54 Can Europe invest fast enough to be able

12:56 to support the grid and the infrastructure around it?

12:59 A lot of the discussion around the potential return of AI

13:01 in general hinges on their ability to prove return from these data centers.

13:05 Data centers also run a natural course of life.

13:08 In the area of AI compute,

13:10 there's now a lot of industrial policy aimed at supporting

13:14 with public funds the construction of local capacity here.

13:19 Even if it's physically located here, a lot of the times,

13:23 in terms of ownership and investment and in terms of technology,

13:28 it's still very much reliant on the U.S.

13:31 in particular.

13:32 We could accept some of that inbound investment, but de-weaponize it,

13:37 make sure that it can't be used

13:41 as a means of geopolitical pressuring against Europe.