The global boom in data center construction is reshaping digital infrastructure at an unprecedented pace and old man Europe is being left behind. From hyperscale AI campuses to edge facilities in remote regions, countries are racing to host the next generation of cloud and compute hubs. But while investment pours into the U.S., Asia, and the Middle East, Europe has not attracted any mega scale data centers.
Once a leader in cloud infrastructure, Europe is now facing serious constraints that could slow its growth in the years to come.
This quote by Andrew Jay, Head of Data Centre Solutions, Europe, in CBRE’s Global Data Centre Trend Report 2024 sums it up nicely.
“Power and land shortages, combined with increased regulation are the most prominent inhibiting factors when it comes to data centre development in Europe. There are added pressures with ever‑rising demand levels as a result of AI growth, underscoring the need for ongoing investment in development.”
Lets take a detailed look at why Europe is being left behind
One of the most pressing challenges is Europe’s limited energy infrastructure. In major data center hubs like Frankfurt, Dublin, and Amsterdam, electricity grids are already stretched thin. Developers face years-long delays just to secure grid access, while others are blocked entirely due to capacity limits.
This is particularly problematic as new AI workloads demand significantly more power than traditional servers. The gap between power availability and technological demand is growing—and Europe is struggling to keep up.
Suitable land for data centers—flat, secure, affordable, and near power and fiber lines—is becoming increasingly scarce. In densely populated areas like London or Amsterdam, real estate is expensive, and communities are beginning to push back against further development. Concerns over noise, heat emissions, and minimal local job creation have led to restrictions and planning delays in several cities.
As a result, many tech firms are being forced to look to secondary markets, which may lack the infrastructure needed for large-scale deployments.
Europe’s leadership in environmental standards is both a strength and a challenge. Strict sustainability regulations mean that new data center projects must meet high efficiency and carbon-neutral benchmarks. Requirements around water use, emissions, and construction sustainability add time and cost to projects—often making them less competitive compared to more flexible markets like the U.S. or UAE.
While these policies reflect Europe’s climate commitments, they can act as barriers in a fast-moving, globally competitive industry.
The cost of building and operating data centers in Europe continues to rise. Labor shortages in skilled trades, high electricity prices, and complex approval processes make it more expensive per megawatt than in many other parts of the world. Investors are growing wary of these added costs, especially when faster, cheaper options are available elsewhere.
Given these limitations, global tech giants are increasingly turning to alternative regions. Saudi Arabia, the UAE, and the United States are investing billions into hyperscale-ready zones with ample power, land, and fewer restrictions. Even within Europe, growth is shifting to the Nordics and Eastern Europe, where energy is more abundant and policies are more accommodating.
A look at the top 6 hyperscale data centers in development or planning none it is instructive to note that none are in Europe.
Unless Europe acts quickly to modernize infrastructure and incentivize local builds, it may find itself sidelined in the global data race.
Europe’s role in the future of digital infrastructure is uncertain. While the region remains committed to sustainability and high standards, its data center growth is increasingly hindered by power shortages, regulatory hurdles, and rising costs.
If these issues go unaddressed, Europe may miss out on the economic and technological benefits of the AI and cloud revolution—watching from the sidelines as others lead the charge.
