During the last few weeks, different criticisms have arisen in various media regarding the intention of the Government of Spain to regulate the deployment of data centers. In some cases, it has been presented as a Spanish peculiarity, as if we were inventing obstacles that do not exist in other countries. It has even been interpreted that the CNMC report on the draft Royal Decree is a disavowal of the entire initiative. I believe we need to stop looking at our own belly button.
Because while we discuss whether Spain should regulate or not, half the world is already regulating, modifying its rules, or considering how to do it. And it is not a coincidence. The accelerated expansion of artificial intelligence is transforming data centers into large consumers of electricity, water, land, and network capacity. They are necessary infrastructures for digitalization and for European technological autonomy, but their scale is beginning to produce effects that no responsible government can ignore.
A good part of the initiatives that appear in the following infographic (AI of course, because I use it and its infrastructure is necessary) that accompanies this article have occurred only between September and October:
- Spain. The draft Royal Decree submitted for public information at the end of August proposed that data centers of at least 1 MW back up 80% of their consumption hour by hour with new renewable generation, incorporates requirements for energy and water efficiency, transparency, resilience, and digital sovereignty, and links compliance to access to the grid. The report from the CNMC, approved on September 22, proposes to modify and adjust some of these instruments, especially additionality, hourly correlation, and certain economic incentives. This is precisely part of the regulatory process: discussing how to achieve the objectives in a proportionate and efficient manner. We are now awaiting the final Decree, which will surely include suggestions and claims presented.
- EU. On September 21, the Commission adopted the new common rating scheme for data centers and simultaneously opened a consultation to introduce mandatory minimum performance standards, with a legislative proposal expected in the second quarter of 2027. The Commission itself expressly recognizes the problems associated with electricity consumption, grid capacity, emissions, and water. The Cloud and Artificial Intelligence Act (CADA) is in its early legislative steps.
- Denmark. On October 1, the Parliament approved an urgent plan to manage an electrical grid that no longer has enough space for all the projects requesting connection. The new legislation allows abandoning the pure principle of first come, first served (also incorporated into the European Networks Package that is already in advanced legislative processing) and prioritize projects according to criteria of social interest and system operation. The Danish political debate has expressly pointed to large hyperscaler data centers as burdens that may fall behind activities considered priorities. The law came into force on October 12.
- United Kingdom. Ofgem, the energy regulator of the United Kingdom, is reforming connections after requests for large electrical loads surged. Data centers alone account for around 73 GW in the connection queue. The regulator has proposed a commitment fee and mandatory milestones that demonstrate that there is a real customer, financial capacity, and contracted equipment. The stated goal is to remove speculative projects from the queue that occupy capacity and prevent viable projects from advancing.
- Germany. Between September and October, the Bundestag has been reviewing its energy efficiency legislation also applied to data centers. In the parliamentary debate, proposals have been presented to prioritize the connection of the most efficient and sustainable centers, while other groups like the Greens and Die Linke have even proposed a moratorium until a solid analysis of needs and capacity is available. Germany already regulates PUE, heat reuse, and renewable consumption of these facilities.
- France. On September 16, the Senate unanimously approved a report with 16 recommendations on the environmental impact of AI. Its approach is interesting: France wants to attract data centers, but making “environmental excellence a competitive advantage”. It demands transparency, territorial integration, more frugal AI, and also to gradually replace the logic of “first come, first connected” with another based on the effective maturity of projects.
- Finland. One of the most attractive European countries for data centers due to its low-carbon electricity and cold climate has just reminded that having clean energy does not mean a blank check. On October 8, authorities forced Google to halt preparatory work on two future data centers in Muhos and Kajaani until completing the corresponding environmental assessments, after large logging and land transformation operations. At the same time, private projects are incorporating commitments for new renewable generation linked to their consumption.
- United States. On September 21, Texas, one of the most favorable places for the sector, halted new state permits while auditing the effect of data centers on electricity, water, and infrastructure. There were more than 470 GW of projects requesting connection. And on October 12, the federal regulator FERC authorized PJM to create a mandatory registry of large data centers to know power, location, schedule, and electricity supply. The debate over who should pay for new infrastructure is now fully open.
- Australia. On September 22, the state of Victoria proposed that new data centers obtain their own renewable generation and storage, finance their connections and network reinforcements, and use recycled or non-potable water. New South Wales is also working on how to pass on water and infrastructure costs specifically to these facilities.
- Malaysia. One of the fastest-growing markets in Asia has created a Data Centre Task Force. The Government makes it clear that only projects with secured electricity and water and verifiable environmental compliance should proceed. PUE and WUE metrics are incorporated, and priority is given to projects that develop local suppliers, employment, and value chain. They do not simply want data centers: they want the deployment to leave industrial value in the country.
- India. The social opposition to projects from Amazon or Google has increased in recent weeks due to their water and electricity consumption, land transformation, and lack of local participation. And precisely today, October 14, the Indian Government announces a new national policy to regulate the development of the sector with an explicit goal: to prevent its growth from raising electricity costs for the rest of the consumers.
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What we observe does not seem precisely like a Spanish extravagance. It is a global trend. Each country is looking for its own solution because the circumstances are not the same. France has very decarbonized electricity. Australia has specific water and grid challenges. Denmark wants to decide who has priority when capacity is scarce. Malaysia is trying to avoid projects without secured resources and use investments to develop its own industry. The United Kingdom wants to clean up an electricity queue saturated with speculative applications. That is why I also do not believe there is a single identical regulation that can be mechanically transferred to all European States.
Europe needs a common framework, but probably more like a Directive than an extremely prescriptive Regulation: strong common objectives and principles and the ability to adapt to the electrical, water, industrial, and territorial reality of each Member State. But the objectives should be clear.
The first is not to increase our fossil dependence. It would be absurd to build the infrastructure of the European digital economy while simultaneously creating new dependence on gas to fuel it. Just look at the behavior of the TTF, the European wholesale gas market, in recent years to understand that it would be shooting oneself in the foot. That is why the renewable additionality proposed by Spain is going in the right direction. We can discuss how to measure it, what exceptions make sense, or to what extent the correlation should be hourly, but we should not abandon the principle.
Second, we need real transparency. Not just ratios. We want to know how much electricity each large installation consumes, how much water it uses, what emissions it causes directly or indirectly, and what impact it has on the grid. The new rating scheme European is a step, but the open discussion about Aarhus shows that there is still a long way to go.
Third, we must manage the capacity of the network as the scarce resource it is starting to become. A connection request cannot block for years hundreds of MW that a factory, the electrification of transport, a chemical industry, a hospital, or a new productive activity might need. This means progressively ending the first come, first served when it no longer serves the general interest and moving towards first ready, first served as soon as possible. It is already incorporated into the European Networks Package that is already in advanced legislative processing. Therefore, what needs to be done is to prioritize real, mature, and financially solid projects. Avoid speculative requests. And ensure a fair competition for electrical capacity among economic sectors.
Fourth and very important: those who cause extraordinary costs on the system must bear a proportionate part of them. If a project of hundreds of MW requires new lines, substations, or firm generation, we cannot automatically accept that the investment is passed on to the electricity bill of all households and businesses.
Fifth, flexibility must have value. A data center capable of shifting computational load to times of renewable abundance does not have the same impact as another that demands the same power in a completely rigid manner 24 hours a day.
Sixth, efficiency and renewables must be transversal elements of the model: PUE, water, heat recovery, storage, renewable generation, and demand management must be part of the same design.
And there is one last issue that we sometimes forget: sovereignty.
Having a building full of servers in European territory does not automatically mean having digital sovereignty. It matters who controls the infrastructure, under what legislation the data is, what capacity we have to access the services, and what happens if a decision made outside of Europe limits that access. We need computational capacity in Europe. A lot, but we need it efficiently. New indicators that relate computing capacity to energy consumed or emissions produced should become increasingly common.
That is why I believe that the Spanish Decree comes at an appropriate time and goes in the direction that our country needs. Surely what we are going to see will improve the draft prior to the public consultation, let us remember that the Ministry of Ecological Transition led by Sara Aagesen has been exemplary all these years facilitating public participation. And surely some of the contributions from the CNMC will be taken into account, as that is what the reports from regulators, the allegations, and the public debate are for.
But discussing how to regulate is very different from asserting that regulating is a mistake. If we observe what is happening from Denmark to Texas, from Finland to Australia or Malaysia, the conclusion is precisely the opposite: the real risk is starting to be not regulating in time.