Europe puts the brakes on data centers. Power is running short and grids are hitting limits

The rapid expansion of data centers is running up against the limits of power grids around the world. While political opposition is mounting in the US and moratoria loom, European countries led by Denmark are beginning to restrict new projects because of capacity shortages. The boom in artificial intelligence and digitalization is thus posing a major challenge for the energy sector: how to balance rising demand with the security and sustainability of electricity supplies.

Data centers around the world are facing growing pressure amid concerns about their energy consumption. In the US, the state of Maine recently came close to banning data center construction, while in Pennsylvania the backlash could hurt existing companies ahead of the election. Other states, including Virginia and Oklahoma, are considering moratoria.

The Nordic countries have long been seen as a magnet for data center investment in Europe, thanks to their stable climate and abundant renewable energy. But now, amid ever-growing demand, they are considering limits because of the sector’s energy intensity. Denmark is at the center of the debate in particular, as the formation of a new government and a sharp rise in grid access requests have led to a pause on new projects.

In March, Denmark’s state-owned grid operator Energinet temporarily suspended new grid connection agreements because of an “explosion” in capacity requests, a spokesperson told CNBC. Around 60 GW of projects are waiting for a connection. That far exceeds Denmark’s peak electricity demand of approximately 7 GW. Data centers account for nearly a quarter (14 GW) of the potential 60 GW of new grid connection projects, the spokesperson said.

"We have to be realistic and look at what is actually available. We can’t just go crazy with all kinds of connection agreements, because there isn’t enough power for that. We need to engage in this discussion and perhaps bring a little more discipline to our own industry," said Henrik Hansen, chief executive of the Data Center Industry Association (DDI).

Hansen added that the surge in requests had created a “speculative” queue, widening the gap between what is available and what has been requested. The industry therefore needs to take a closer look at projects that may not be as viable, he said, adding that the association is calling for more criteria to determine who should receive the highest priority and fastest connection.

Rising electricity consumption and the AI boom are forcing European countries to tighten the rules

Denmark is not the only European country taking similar steps. Ireland, for example, has significantly restricted connections for new data centers around Dublin in recent years, where this infrastructure already accounts for a significant share of overall electricity consumption. The country’s transmission system operator warned that without further investment, the grid could become overloaded and the risk of outages could increase. Similarly, the Netherlands introduced a moratorium on new projects in the North Holland region in the past to allow time to reassess its energy and spatial planning strategies.

The growing pressure is primarily linked to the rapid development of technologies such as artificial intelligence and cloud services, which are dramatically increasing demand for computing power and electricity. According to estimates by the International Energy Agency (IEA), electricity consumption by data centers could rise significantly in the coming years, driven in particular by the expansion of AI applications. This trend is also making climate targets harder to meet, as the rapid growth in energy demand could outpace the development of renewable energy sources.

Another problem lies in the structure of energy grids themselves. Data centers require a stable, uninterrupted supply of electricity, increasing pressure on baseload energy sources. At the same time, many European countries are moving away from fossil fuels and nuclear power, creating tension between decarbonization and rising consumption. Grid operators therefore face a complex task: ensuring enough capacity for new projects without jeopardizing the stability of the entire system.

The debate is therefore increasingly shifting toward regulation and prioritization. Some countries are considering stricter rules for connecting data centers, including requirements for energy efficiency or mandatory use of renewable energy. There is also discussion about whether new projects should be conditional on, for example, investment in their own energy infrastructure or flexible consumption during peak periods.

Overall, data centers are no longer seen merely as technological infrastructure and are increasingly becoming a key factor in energy policy. In a context of limited resources and rising demand, experts say, the decisive factor will be how quickly the development of the digital economy can be aligned with the capacity of energy grids and long-term climate goals.