Europe Applying Heavier Hand Than U.S. To Control Data Center Growth

The politics of data centers are shaping the development landscape in the UK and EU much differently than in the U.S.

While Europe hasn't seen anything near the uprising of opposition to data center projects that has emerged in North American markets, the UK and EU have been ahead of the U.S. when it comes to regulations for data center developers and operators — particularly around power and sustainability. 

Data center firms face stricter environmental regulation across Europe than in the U.S., with countries imposing performance standards for energy efficiency and water usage and even mandating that all data centers find customers for their surplus heat as a condition of permitting. Additionally, energy regulators and grid operators in some EU markets are ahead of the U.S. in requiring data centers to adjust their power consumption on command from utilities and even use their on-site generators to provide power to the grid. 

These regulatory regimes factor heavily in the site selection math for data center developers building in Europe and the UK, industry executives said at Bisnow’s Data Centres Europe Conference in London last month.

How this landscape shifts in the coming months remains to be seen, as attitudes toward sustainability change and countries weigh their national AI ambitions against local environmental concerns.  

If the industry wants to avoid stricter regulation in the months and years ahead, developers looking to build in Europe need to take a proactive approach to sustainability and grid stewardship practices, panelists said. They can choose to change their practices voluntarily and on their own terms, or they will eventually be forced into those changes on terms dictated by regulators. 

“We're now recognized as an issue, so we get ahead of it or we get very aggressively regulated,” said Liam Newcombe, senior vice president of product, energy strategy and innovation at GreenScale Data Centres. 

European data center development may have largely avoided the grassroots pushback seen in the U.S., but that is primarily due to the UK and EU data center markets significantly trailing the U.S. in overall size and growth rate.

As of November, the U.S. had 5,427 data centers, according to CloudScene. The top 10 European markets combined — a list led by Germany, the UK and France — had just 2,595 data centers. And while the top four U.S. markets saw a 43% year-over-year increase in capacity in the first half of 2025, the four largest European markets grew by just 7.2% in the same period, according to CBRE. 

Europe hasn't seen an explosion of the gigawatt-scale campuses proposed in remote locations that are sweeping North America as tech giants scramble for AI computing capacity. Within the largest European markets, development has remained close to major population centers, although new hubs are emerging in the Nordics and the Iberian Peninsula due to cheap power and relatively abundant renewable energy. 

Europe’s more zealous oversight — particularly the stricter environmental rules across the region’s markets — is one of the most oft-cited reasons why its data center growth lags behind the U.S.

While U.S. data center firms and utilities are navigating power constraints by turning to natural gas and other fossil fuels, large-scale adoption of that approach wouldn’t fly in the UK and Europe, said Adrian Del Maestro, vice president and leader of the energy advisory practice at AECOM.

At least for now, European developers and governments continue to prioritize a transition to clean energy and hitting sustainability targets, even as the U.S. retreats from those goals. 

“Look at what's happening in the U.S. now. If you cannot get a clean grid connection, you're resorting to hydrocarbon,” Del Maestro said. “They have a different perspective on sustainability to what we have in Europe and in the UK.”

The EU has instated an energy efficiency directive with clear standards for data center efficiency and reporting of sustainability data. Developers also face additional requirements in certain countries. Yondr Senior Design Manager Nicholas Holz pointed to German efficiency standards that have been a “pain” for his design team to meet. 

European markets are also far more concerned about water consumption than in North America, Holz said. This means U.S.-centric data center designs that use water-intensive evaporative cooling are effectively off the table throughout most of Europe. 

One of the most dramatic splits between the U.S. and Europe concerns attitudes and policies toward heat reuse — utilizing waste heat from data centers to heat homes, greenhouses, fish farms or other commercial applications. 

In the U.S., heat reuse is broadly dismissed as a sustainability initiative that sounds good on paper but rarely makes sense in practice. Europe, on the other hand, has widely adopted it, fueled by regulation and viable applications in urban district heating systems.

However, new European mandates requiring heat reuse are restricting site selection to areas near industries or utilities capable of using the heat, which are scarce, according to Del Maestro.

“What we're seeing basically all the way down Western Europe is some level of progression in either requiring a heat reuse business case or local governments effectively requiring a heat reuse deployment in order to grant the planning,” GreenScale’s Newcombe said. “It's going to affect where we put data centers, though, because you need to have a heat consumer for this to work.”

Compared to the U.S., European governments have also been far more aggressive in implementing regulation to prevent data centers from causing grid instability. Regions within Ireland and the Netherlands have gone as far as implementing moratoriums on new data center development due to power constraints — a step that regulators and utilities in the U.S. are just now beginning to consider. 

European governments and grid operators in Ireland, France, Denmark and Finland now require data centers to be active grid participants, disconnecting or even supplying power with on-site generators. As Europe rapidly increases renewable power generation, the steady baseload power from data center campuses is increasingly valuable to utilities, Newcombe said.

“Utilities are all bringing in new grid code modifications to require data centers to stay online through grid faults so that we don't cause an Iberian blackout,” Newcombe said.

“That's the other leg of the regulation that's coming, including pushing us to make our generating assets available during stress conditions. We’ve become part of the transmission system now, so we'll be regulated like people who run power plants.”

Industry executives generally expect the European regulatory landscape for data center developers will only get more difficult. But they did point to some factors that could potentially push the trend in the other direction. 

European energy policy may be more sustainability-focused than in the U.S., but that could change if the rising energy demand and the shift toward renewables drive up consumers’ electricity bills, as has happened in parts of the U.S. Del Maestro said there are already signs of public sentiment souring on net-zero initiatives, opening up the possibility that fossil fuel solutions could become viable if it means keeping power costs down. 

“The world has changed with regard to net-zero,” he said. “Rightly or wrongly, we’re now in a world where you can criticize net-zero, and there are concerns around the costs of net-zero.”

Del Maestro said he expects the geopolitical AI arms race will compel national governments to fast-track data center development, overriding local opposition. The UK, for instance, has already classified data centers as critical national infrastructure, enabling the secretary of state to authorize permitting that bypasses local planning regulations.

Europe may increasingly echo the conflict underway in the U.S. between federal officials who want data centers built as fast as possible and local governments in the industry’s major markets that are increasingly trying to put up roadblocks. 

“There's going to be tension amongst those communities and the aspirations of national governments,” Del Maestro said. “This business is sitting right in the crossfire between government and those stakeholders. It's going to be interesting times going forward.”