EUDCA research affirms data centres' digital importance

The European Data Centre Association (EUDCA) has published its inaugural State of European Data Centres report, in collaboration with European National Trade Associations (NTAs). The new report, which can be downloaded freely from the association’s website, marks an important step in documenting and recording the state of the industry, allowing greater ongoing analysis and insights, tracking progress and development, and faithfully reflecting a vibrant industry that while experiencing challenges, has potential to be at the heart of a digital Europe.

Michael Winterson, Secretary General of the EUDCA said: “Europe’s digital economies could not have been established without the backbone of data centres that provide digital sovereignty while contributing significantly to GDP. The State of European Data Centres 2025 provides a benchmark of this vital industry and a reference point for informed, data-driven decision-making as we continue building Europe’s digital future.”

The contribution of data centres to Europe’s economy The data centre industry contributes significantly to Europe’s socio-economic landscape, according to the report. Colocation data centres alone were responsible for €30 billion in GDP in 2023, expected to reach €83.8 billion by 2030, with the creation of thousands of direct and indirect jobs.

The market is expanding rapidly, driven by artificial intelligence (AI) and digital service growth, with demand outstripping supply and attracting billions of euros in investment. Major centres of activity include Frankfurt, London, Amsterdam, Paris, and Dublin (FLAPD), with intense activity in emerging hubs in the Nordics and Southern

Europe. Additionally, new metropolitan hubs are emerging in and around cities such as Barcelona, Rome, and Athens.

Data centres must evolve as flexible energy partners to grid suppliers “A key implication from the report,” continued Winterson, “is the need for data centres, as large energy consumers, to become flexible energy partners to grid providers.”

Sustainability data shows that more than a quarter (28%) of operators have invested in on-site renewable energy generation capability, and 41% plan to do so. In support of these efforts, 28% are planning on installing battery energy storage systems (BESS) within the next two years.

Currently, nearly a quarter (22%) of data centre operators provide grid stabilisation or energy trading capacity to energy grids, greatly facilitating further utilisation of renewable energy sources (RES). This will almost triple (59%) in the next two years. All of this means that data centre operators, through increased resilience and energy independence, can engage with grid operators to relieve stress on grids, while providing supports such as grid stabilisation services.

Data centre challenges are quickly becoming opportunities The report finds the industry faces challenges related to power availability, sustainability, and regulatory compliance as new reporting obligations came recently into effect. More than a third (36%) said that regulatory compliance will be a challenge over the next three years.

However, these challenges also present opportunities for innovation in energy efficiency, flexibility, and heat reuse. The sector's continued growth will necessitate ongoing investments in sustainability to minimise environmental impact.

Water usage efficiency running ahead of targets Another bright spot is improvement in water usage. Of those operators who reported water usage effectiveness (WUE), the average was 0.31 litre per kWh for 2023, well below the Climate Neutral Data Centre Pact (CNDCP) target of 0.4 l/kWh for water-stressed areas.

The industry is also advancing technologies such as liquid cooling and heat reuse to improve efficiency and reduce its environmental footprint. Currently, half of operators have residual heat coupling capability, with a further 38% expected in two years. Already, three quarters of operators have energy or environmental management systems in place.

Energy access, skills gaps, and compliance frameworks need to be addressed The data centre industry also faces significant challenges, including power supply constraints, permitting delays, and a growing skills gap in technical fields. More than 75% of survey respondents consider access to power as the biggest challenge for the sector in the next three years, despite a willingness to invest in alternative solutions to

access power. Energy costs are also a concern, as rising wholesale prices impact operators.

The additional responsibility of regulatory compliance was also significant, with more than a third (36%) citing it as a major challenge in the near future. There are significant concerns that duplication and redundancy in reporting frameworks will deter compliance, reducing effectiveness and frustrating regulatory goals. The EUDCA reaffirms its Manifesto commitment to achieving consistent and transparent reporting across European data centres by working with regulators and European policymakers to ensure that regulations are fair, efficient, and encourage positive behaviour.