At a conference in Amsterdam on February 5, industry analysts warned that European data centers, despite a 22% capacity expansion this year, are struggling to keep up with demand, potentially hindering Europe's competitiveness in the AI race. China's recent focus on energy-efficient AI models added to the pressure, highlighting Europe's challenges with electric grid congestion and limited suitable locations for new centers.
Major tech companies like Google and Amazon are ramping up plans for "hyperscale" data centers, while European corporations are also in need of more AI-focused infrastructure. Kevin Restivo, director of data center research at consultancy CBRE, emphasized the inability of providers to match supply with demand due to space shortages, particularly in key European hubs like Frankfurt, London, Amsterdam, Paris, and Dublin.
To address capacity limitations, secondary markets in Europe, including Milan, Warsaw, and Berlin, are witnessing rapid growth, as companies seek alternatives beyond major cities. CBRE projects around 9.1 gigawatts of capacity to come online this year, with hyperscalers accounting for over a third of the expansion.
The average cost to build "colocation" space within a data center across Europe is estimated at €12 million ($12.50 million) per megawatt, indicating an industry expansion exceeding €100 billion this year. However, this investment lags behind the US, notably the $500 billion commitment by Oracle, Microsoft, and OpenAI through the initiative.
Stijn Grove, managing director of the Dutch Data Center Association, underlined Europe's risk of technological dependency and potential loss of AI leadership to the US and China.