Electricity demand for data centres in Europe could more than double by 2030

Electricity demand for data centres in Europe could increase 2-3x by 2030, BI estimates, with scope for earnings gains for EDP, RWE and other renewable peers, especially in the light of ambitious net-zero pledges by Microsoft, Google and other hyperscalers.

Patricio Alvarez, BI Senior Industry Analyst (Energy), commented: “The construction of conventional European pressurized water reactors known as EPRs tends to take over 10 years and is highly capital intensive as exemplified by the delayed start of Hinkley Point C in the UK. The development of new-generation reactors, including small modular ones (SMR), with alternative forms of cooling is promising, with the European Commission having included nine projects under the EU Industrial Alliance on SMRs. Yet the scale-up of SMRs and other advanced nuclear-power plants is likely to be protracted if the track record for conventional serves as precedent, with most projects targeting commercial starts by the mid-2030s.”

“Consequently, we see demand for solar, battery storage and offshore wind poised to gain from a potential increase in AI-driven power use through the end of the decade.”

Europe hosts 15-20% of global data-centre capacity, with proximity to customer hubs explaining their location. The UK, where these centres make up 3% of power demand, may remain a top market, with energy use from the sites seen rising 6x by 2035, according to National Grid. Data centre supply in the Frankfurt-London-Amsterdam-Paris-Dublin hub is expected to expand 20% in 2024, while European data-centre power use could surge 3x over 2023-30, according to Iberdrola.

Madrid, the Nordics and other secondary hubs may see data-centre buildouts expand at a faster pace, driven by access to power supply and land availability. Iberdrola aims to develop sites and provide power in Spain, where its most optimistic view sees data-centre power use soaring as much as 18x by 2030 (10% of Spanish electricity demand).

Europe's Nuclear-Power Capacity Set to Flatten to 2030

Nuclear-power capacity in Europe is poised to decline by about 5% over 2023-30 as the few reactor starts fall short of offsetting state-mandated phaseouts. Germany closed its remaining plants – Isar 2 (EON), Neckarwestheim 2 (EnBW) and Emsland (RWE) -- in 2Q23, four months later than expected due to the energy crisis. Combined with the winding down of several of EDF's UK reactors and Engie's Doel 3 plant in Belgium, it suggests the gross removal of 10 gigawatts of nuclear capacity from Europe's power stack in 2022-24. The start-up of the 1.6 GW Olkiluoto 3 plant (25% owned by Fortum) in 2023 and the planned commissioning of EDF's 1.6 GW Flamanville 3 project this year could help mitigate the overall decline in capacity.

Patricio Alvarez, added: “In many ways, nuclear power would dovetail nicely with the boom in spending on generative AI. Nuclear technology can provide reliable baseload electricity, and since these power plants don't emit greenhouse gases, they could help meet carbon-reduction pledges made by Meta, Microsoft, Amazon.com, Alphabet and other hyperscalers. Yet the main challenge with nuclear is that construction timelines can stretch for a decade or more in the US and Europe, so output from new reactors isn't likely to play much of a role in supplying data centres before 2035. Restarting dormant nuclear power plants is a different matter, and other companies may copy Microsoft's approach. Constellation Energy announced on Sept. 20 a plan to restart one of the reactors at its Three Mile Island power plant to supply Microsoft data centres.”