European data centers are set to expand their capacity by 22% this year to meet the burgeoning demand driven by artificial intelligence (AI). However, industry experts warn that this may not be enough to prevent Europe from falling behind in the global AI race.
Industry insiders expressed concerns at a conference on Wednesday, highlighting that the increase in capacity may not suffice to address the soaring demand. This comes as China’s DeepSeek, a notable player in the AI sector, introduced more energy-efficient AI models, which nonetheless do not mitigate Europe’s challenges with electric grid congestion and the scarcity of viable locations for new data centers.
Large corporations like Google and Amazon are forging ahead with their plans for ‘hyperscale’ data centers in Europe, necessitating even more space linked to AI advancements. Kevin Restivo, who leads data center research at CBRE, emphasized in his speech that providers are unable to build new facilities quickly enough to align with the escalating demand.
The shortfall in space is particularly pronounced in major European cities such as Frankfurt, London, Amsterdam, Paris, and Dublin. These traditional hubs face growth limitations due to electric grid constraints. Meanwhile, secondary markets like Milan, Warsaw, and Berlin are witnessing rapid growth, although the trend of companies looking beyond urban centers is noticeable.
CBRE’s analysis indicates that the new capacity anticipated to come online this year will require approximately 9.1 gigawatts of power, with a significant portion being allocated to hyperscale developments. The cost of developing colocation spaces, frequently rented by large enterprises, stands at an estimated 12 million euros per megawatt, reflecting Europe’s substantial industry growth focused on data facilities.
Despite these efforts, the investment trends in Europe are dwarfed by the extensive commitments seen in the United States, particularly the extensive ‘Stargate’ project involving Oracle, Microsoft, and OpenAI, which plans a staggering $500 billion investment over the next four years. Stijn Grove from the Dutch Data Center Association voiced a stark warning about Europe potentially becoming technologically reliant on other global powers.
The economic implications are clear; if Europe fails to bridge the gap in data center capacities, it risks falling further behind not just in AI, but in tech-driven sectors as a whole.
The expanding capacity of Europe’s data centers underscores the region’s intent to strengthen its AI capabilities. However, without addressing the foundational issues such as energy constraints and space scarcity, Europe may struggle to maintain its competitive edge in the tech landscape dominated by the US and China.
