Power availability is the European datacentre market’s “single most important” growth inhibitor, forcing operators to look further afield for sites with abundant renewable energy to meet the growing demand for artificial intelligence (AI) compute capacity.
That’s according to the State of European datacentres 2026 report, published by trade body, the European Datacentre Association (EUDCA), which revealed that the geographic spread of datacentres in Europe is now expanding in response to this trend.
“The sector is expanding at record speed across multiple regions in Europe [and] while the Frankfurt, London, Amsterdam, Paris and Dublin markets remain essential to Europe’s digital core, growth is now increasingly distributed across Southern Europe, the Nordics, Central and Eastern Europe, and rising group of Tier-2 metropolitan regions,” the report stated.
“From 2025 into 2026, Europe’s datacentre sector is reaching a structural inflection point. Demand continues to accelerate, driven by AI, cloud adoption and the digital sovereignty imperative. However, growth is increasingly constrained – not by capital or customer appetite, but by energy availability, grid readiness and permitting complexity.”
The European colocation market continues to go from strength to strength, according to the report, and is growing rapidly due to enterprises looking to modernise their IT estates, migrate to hybrid cloud setups and tap into AI-related compute capacity.
“Scale colocation campuses – designed to accommodate cloud and AI platforms at industrial scale – are now the primary driver of new capacity additions,” the report continued. “Investments in new construction are reaching new highs, with €176bn in cumulative investments expected in Europe between 2026 and 2031.”
The hyperscale cloud and internet giants are continuing to build out their presence across Europe, with these players credited with driving much of the growth happening outside of the continent’s traditional datacentre hubs.
“The market has shifted generally from hub-centric expansion to a distributed, energy- driven location strategy, fundamentally altering Europe’s datacentre geography,” the report stated.
And while the demand for cloud services remains a strong source of datacentre market growth, enterprise appetites for AI services are causing what the report described as “hyper-expansion” to occur in the sector.
However, issues around power availability and security risk hampering how much growth can occur, the report continued: “The continued challenge of access to power is holding back a lot of investments [and] as a result, total datacentre power will not be able to triple as required, according to the European Union.”
The report also saw operators quizzed on what they think will be the biggest challenges for their organisations over the next three years, with access to power emerging as their biggest concern with 67% of the vote, followed by permitting issues (44%), sourcing technical staff (39%) and high energy prices (30%).
The report also highlighted the socio-economic impact of the European datacentre market, and concluded the sector contributed €53bn in GDP in 2025, which is a figure that is predicted to rise to €137.5bn by 2031.
EUDCA secretary general Michael Winterson said that while the market is not without its challenges, the “exceptional growth” it is on course to achieve is welcome news.
“Once the issues of power availability and access are addressed, Europe has the opportunity to lead globally in AI-ready infrastructure while maintaining the highest standards of sustainability and responsible stewardship,” Winterson added.
