• Germany (Frankfurt) is forecast to overtake the UK (London) as Europe’s leading colocation data center market as capacity shifts eastward
• The EUDCA now expects faster industry expansion, with €176 billion in investment and total capacity reaching 23.6GW by 2031
• Growth is being driven primarily by AI demand and increasing focus on European digital sovereignty
• Northern and Southern Europe will see the fastest expansion, supported by new subsea cables and diversification efforts
• Energy availability, land constraints, and major skills shortages remain the biggest challenges despite strong momentum
With over two-thirds of “IT power” delivered by commercial colocation and hyperscale facilities, that’s a substantial reordering of the European compute landscape.
Europe’s compute center of gravity will shift eastwards over the coming years, with Germany displacing the UK as the top colocation spot. At the same time, countries in Northern and Southern Europe are poised to grab a bigger slice of the data center pie.
These predictions appeared in the European Data Centre Association’s (EUDCA) annual report, which raised its growth predictions for the sector overall, while highlighting the drivers and concerns around the industry’s breakneck growth.
“We’ve seen a pretty significant increase in the amount of capital being put into data center infrastructure,” said EUDCA secretary general Michael Winterson. As for growth in the next five years: “We’re forecasting €176 billion of capital investment in data center infrastructure in Europe.”
How big is an AI data center? Take a deep dive into the report data and definitions
- The EUDCA’s report focuses on retail, wholesale and scale location, along with hyperscale and enterprise sites.
- Hyperscale data centers typically have capacities starting at 20MW.
- Retail colocation spaces typically cater to customers with workloads up to 1MW, while wholesale colocation data centers handle customers needing 1MW plus.
- EUDCA describes AI data centers as a “specific class” of wholesale colo capable of power densities over 20kW per cabinet.
- The scale location facilities that will drive growth over the rest of the decade are “very large facilities” starting at 20MW.
- The report identified 10,539 data centers with capacity of 50kW or more across Europe at the end of 2023, of which 8,342 were enterprise facilities offering less than 1MW of capacity.
AI and data sovereignty driving growth
A year ago, the industry expected a compound annual growth rate (CAGR) of 14% in scale and scale colocation IT power supply over the period, Winterson told CloudFest. It now expects CAGR of 17%, resulting in a total capacity of 23.6GW by 2031. That translates into an additional 5GW to 6GW of capacity, he said. Meanwhile, hyperscale growth over the period will come in at 14% CAGR to hit 7GW.
AI has been a key driver of this boost in data center growth, but the industry has also benefited from a shift in thinking on digital sovereignty. The European Commission was sending “clear signals” to businesses about investing capital on EU territory, said Winterson.
Data diversification beyond FLAP-D
The key FLAP-D locations, Frankfurt, London, Amsterdam, Paris and Dublin, will account for 8GW of capacity in 2031, up from 3.6GW in 2024. But London will show the slowest growth, rising from 1.2GW to 2.1GW, while Frankfurt will grow to 2.6GW over the period, a 17.4% CAGR.
The same pattern repeats at country level. The FLAP-D host countries will grow total capacity from 5.3GW in 2024 to 11.5GW, a 12% CAGR. And while the UK was the dominant player in 2024 with 1.8GW, Germany will have 4.2GW of capacity by 2031, a CAGR of 16% over the period. This will push the UK into second place with 3GW.
But other areas will see even faster growth. The Nordic colo market will see 26% CAGR over the period, topping out at 4.4GW, while Southern Europe will reach 5.9GW, a CAGR of 36%.
In the hyperscale market, Ireland will remain the biggest location with 1.8GW of capacity by 2031, though growth here will be slower than the other FLAP-D countries, and the Nordics will boast slightly more capacity overall.
Southern Europe hotspot
But the strongest hyperscale growth will come in Southern Europe, which will be home to 1GW of capacity by 2031, off the back of a 39% CAGR. Data center investment in Spain, Italy and Portugal is surging, in part, because of new subsea cables the report said.
That diversification in cables is part of a broader shift towards building resilience and sovereignty across Europe’s data center sector. It’s become increasingly clear that undersea cables have become a target for adversaries looking to sow chaos.
Overall, investment in traditional colocation capacity will peak at €5.8bn this year, EUDCA found, before slipping to €5.2bn in 2031. But investment in scale colocation—facilities “designed to accommodate cloud and AI platforms at industrial scale”—will grow from €7.7bn in 2026 to €17.7bn this year, and €26.1bn by 2031.
Investment by hyperscalers “remains exceptionally strong”, the report said and is expected to stabilize around €7bn.However, this doesn’t account for a wave of investment expected after 2031.
Energy is the biggest challenge for data centers
While the sector seems set for surging growth, there are ongoing challenges.
“Energy still is our number one issue,” Winterson said. “I think energy will continue to bite at the market, because it’s the one thing that is practically totally out of our control.”
Energy is cited as the “biggest single challenge” by just over two thirds of operators—down from just three quarters. The CAGR in projected IT power demand is 17%. But the report says that energy efficiency is “holding firm even as usage rises”.
The EUDCA also found 90% of energy consumption by European data centers is from renewable sources. Meanwhile, operators continue to look at better management of energy and water use, heat reuse, and search for ways to relieve the pressure on traditional energy grids.
And land remains scarce. Governments and regions are trying to be AI- and Cloud-friendly by overhauling planning processes, Winterson said, but “these planning policies haven’t all been executed. So, it seems that planning is still a bit of an issue.”
Skills are a major challenge
If land and power are in short supply, so are skills, right along the supply chain, including construction, design, and production.
As Winterson puts it, “Imagine a market that was growing at 8% and everybody was pretty much assuming that that was going to be our growth rate in Europe for the foreseeable future.”
The supply side, manufacturing and construction companies were all “rightsizing” for that, he said.
“[But] in the space of 24 months, that growth rate has doubled to 17%. Everybody in the construction and design and supply chain is understaffed and has production lines that are going to start operating at 100 to 100 plus percent.”
The entire supply chain was already tight, he said. “But we’re also very worried that it’s taken us 20-some-odd years to get to size one today, and we’re going to turn that to size 2.6 in six years’ time.”
But that’s one challenge among many. And as Winterson said, “We’re actually seeing that geopolitics and energy access have not slowed down the animal spirits of our industry.”
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