Some old power plants in Europe face a new future as data centers

Some old coal- and gas-fired power plants in Europe face a new future. Large technology companies such as Microsoft and Amazon want to convert them into data centers. The sites offer access to electricity and water, both important resources for operating facilities designed for artificial intelligence, Reuters reports.

Energy companies such as France’s Engie, Germany’s RWE and Italy’s Enel can reduce the costs of closing their old power plants through these conversions, while also securing favourable long-term electricity supply contracts. For technology companies, meanwhile, these sites offer a fast way to gain access to the power grid and water-based cooling facilities, two major obstacles to expanding AI data centers.

Technology companies see former power plants as ideal locations for data centers: they already have infrastructure in place, including access to water, the potential to recover heat and a grid connection. Connecting to the grid in Europe can take more than ten years, so repurposing these sites can speed up the entire permitting and construction process. According to Synergy Research Group, data center capacity in Europe remains significantly lower than in the US and Asia, largely because of slower permitting.

Energy companies can either lease the land or build and operate the data centers themselves. This gives them stable, long-term electricity supply contracts and the opportunity to establish a permanently profitable business. So this is not just a one-off land sale, but a way to build a long-term relationship with technology partners that helps reduce risk and support further infrastructure investment.

Data centers represent an attractive opportunity for energy companies. They can secure long-term electricity supply contracts that support the construction of new renewable energy sources. Analysts say technology companies are also willing to pay up to 20 euros (more than CZK 490) extra per megawatt-hour for low-carbon energy. Given their enormous consumption—from hundreds of megawatts to a gigawatt or more—these “green premiums” could bring companies hundreds of millions to billions of euros in additional revenue, according to Reuters’ calculations.

Another possibility for the future is to build a so-called energy park, where a data center is connected directly to a new renewable energy source and uses the grid only when needed. Industry sources say this is still a relatively new concept.

Most of the 153 coal-fired power plants in the EU and the UK are expected to close by 2038 to meet climate targets. They will join the 190 plants that have closed since 2005, according to figures from the NGO Beyond Fossil Fuels, which campaigns to accelerate the closure of coal-fired power plants.