The European data centre sector is undergoing a major transformation toward decarbonisation, aiming to source 75% of its energy from renewables by December 31, 2025, and to reach 100% by 2030.

Michael Winterson, Secretary General of the European Data Centre Association (EUDCA), affirms that these goals can even be met before the end of the decade, although several obstacles are slowing the process.

“The issue is not 2030. The problem lies in the fact that the energy grid is constrained for two reasons. One is that renewable energy is inherently variable and does not provide inertia to the grid. The second is that as other sectors, such as transport and heating, electrify, they will exert great pressure on the grid. I don’t believe Europe has the right level of investment,” explains Winterson in an interview with Strategic Energy Europe.

Firm commitments have been made under the Climate Neutral Data Centre Pact, signed by the main players in the sector.

It’s worth noting that, according to BloombergNEF, global electricity demand is projected to increase by 75% by mid-century, driven by digitalization, the electrification of transport, and rising cooling needs in emerging economies.

“Incremental electricity demand from data centres will reach 3,700 TWh by 2050, representing 8.7% of total final energy demand,” states BloombergNEF. They also point out that by 2035, an additional 362 GW of generating capacity will be needed to meet the growing energy needs of these facilities.

A promising future, but not without obstacles

The sector’s ambition is clear. So is its technological capability. The bottleneck is both political and structural.“There will be data centres, and people will continue using technology. But if Europe doesn’t act now, growth will be marginal—5 to 6% annually. Meanwhile, China and the U.S. grow at 20 to 30% per year,” warns Winterson.

The EUDCA insists that the opportunity is within reach but urgent decisions are needed.

“Today, renewable energy in Europe is cheaper than fossil energy. But grid overcharges make it unviable. The dream is to fix the grid,” says the Secretary General.

The key role of PPAs

Power Purchase Agreements (PPAs) have become the main tool for decarbonising data centres in Europe. According to the association, its members operate at 94% renewable energy, of which 12% comes from PPAs.

A report from EUDCA states that the Information and Communication Technologies (ICT) sector accounts for half of all corporate renewable energy contracts signed worldwide, and the trend continues.

However, the European market faces major limitations.

“The PPA market in Europe is just one-third the size of the U.S. market. And it’s not about money: it’s about fragmentation and energy protectionism,” Winterson emphasizes.

The association warns that regulatory barriers and the lack of a unified electricity market are the main bottlenecks. France does not recognize solar PPAs from Spain, and Germany blocks energy imports from Norway.

“Until Europe achieves a single electricity market, it will continue to lag far behind in PPAs. It’s a shame, because we have the capital, we want to invest, but we can’t justify it due to Europe’s high cost structure. It’s simply better to invest elsewhere,” he states.

“If these issues are not solved, the AI revolution will go somewhere else. The market is doubling very quickly, and it will double where energy is more cost-effective. And it won’t be here in Europe unless something is done today, not in five years.”

To address these barriers, EUDCA proposes enabling demand and supply pooling so that smaller operators can access PPAs. It also calls for extending long-term energy transmission rights to 10–20 years to enable viable cross-border agreements.

Political and technical infrastructure in check

With the mass electrification of sectors like transport and heating, grid pressure is set to double. EUDCA estimates that without increased investment and interstate coordination, infrastructure won’t keep up with the technological boom.

“China is the only country ahead in grid development. In Europe, if we don’t resolve this during the current political term, the digital and AI revolution will happen elsewhere,” says Winterson.

On-site generation and emerging technologies

Given the challenges with PPAs and soaring energy prices, data centres are exploring new onsite generation models: solar panels, battery storage, fuel cells, microgrids, and small modular reactors (SMRs).

The microgrid model—data centres operating independently or semi-independently from the grid—is seen as a strategic solution. But regulatory barriers persist. “If I want to produce my own energy, I have to deal with 27 different regulatory frameworks,” Winterson explains.

Green hydrogen is also under evaluation. But the economics are not yet favourable. “We’re seeing prices of 400 euros per MWh. We need to bring that down to 100 to invest. And without investment, there is no demand,” he says.

In this context, EUDCA is working with the European Commission on a pilot scheme to use curtailed energy and convert it into green gases like hydrogen, methane or synthetic fuels.

The urgency to standardise and digitise

Beyond energy issues, data centres face new EU regulations such as the Energy Efficiency Directive, DORA, and NIS 2. This demands clearer standards and harmonised KPIs to reflect operational efficiency.

EUDCA warns that a lack of harmonisation could lead to inconsistent and misleading data. It urges that reporting requirements focus on what operators can actually control and reflect the technological reality of the sector.