Data centres are fundamental to European competitiveness, but challenges remain

Data centres are fundamental within the competitive international landscape, serving as crucial components of Europe’s digital infrastructure, housing the IT equipment necessary for storing and processing data, and enabling the digital services that underpin European economies and society. However, there are distinct challenges for the market as three quarters of data centre operators consider access to power as their biggest challenge in the next three years.

These are findings from a new report from the European Data Centre Association (EUDCA) entitled “State of European Data Centres 2025”.

The report aims to enhance an understanding of the European data centre market's fundamentals, opportunities, and challenges, while contributing valuable insights to foster the sustainable development of the industry in Europe.

“The digital economies of Europe could not have been built without the foundation of digital infrastructure comprising a network of more than 9,000 data centres. To remain competitive globally and to support the continuing wave of technological development and digital transformation, the data centre industry must ensure continued focus on efficiency and sustainability while driving innovation,” said Michael Winterson, Secretary General, EUDCA.

Data centres significantly contribute to Europe’s socio-economic landscape, finds the report. In 2023, colocation data centres alone accounted for €30 billion in GDP, with forecasts predicting €83.8 billion by 2030, alongside the creation of thousands of direct and indirect jobs.

Energy use and sustainability

To meet sustainability challenges, three quarters already employ environmental or energy management systems, half use residual heat coupling, and almost half (47%) employ IT equipment recycling practices.

Sustainability is a guiding principle for data centres in Europe, and widespread support and adoption of voluntary measures such as the Climate Neutral Data Centre Pact (CNDCP) demonstrate not just commitment but the will to go beyond compliance.

Markets and growth The market is expanding rapidly, with demand outstripping supply and attracting billions of euros in investments. This growth boosts GDP, creates jobs, and supports digital sovereignty. Major centres of activity include Frankfurt, London, Amsterdam, Paris, and Dublin (FLAP-D), with intense activity in emerging hubs in the Nordics and Southern Europe.

The report finds the industry faces challenges related to power availability, sustainability, and regulatory compliance as new reporting obligations came recently into effect. However, these challenges also present opportunities for innovation in energy efficiency, flexibility, and heat reuse. The sector's continued growth will necessitate ongoing investments in sustainability to minimise environmental impact.

The European data centre market is poised for significant growth, driven by digitalisation, cloud adoption, and AI advancements. Addressing key challenges such as power constraints, regulatory compliance, technical skills shortages, and sustainability pressures will be crucial to maintaining this growth. Continued investment in green technologies, streamlined regulatory frameworks, and workforce development will be essential to ensure Europe's competitiveness in the global digital economy.