Europe's Data Centre Falls Short as AI Demand Soars

CIOTechOutlook Team | Thursday, 06 February 2025, 05:14 IST

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European data centres are set to increase their capacity by 22% this year, yet they will still have difficulty fulfilling demand, heightening the risk that Europe could lag further in the competition for artificial intelligence (AI), as per industry analysts.  

Last week, China's DeepSeek startled markets by introducing the possibility of more energy-efficient AI models. It is improbable that this will address Europe’s urgent problems of electric grid overload and a lack of appropriate locations for new facilities.

Major software firms like Google and Amazon intend to move forward with initiatives for "hyperscale" data centers, while European companies also require additional AI-related space.

"Providers are unable to create supply quickly enough to match demand," stated Kevin Restivo, director of data center research at consultancy CBRE, during his keynote speech at the Kickstart Europe conference.

Space constraints are particularly severe in the traditional major European data center hubs of Frankfurt, London, Amsterdam, Paris, and Dublin, where restrictions in the electric grid are hindering capacity expansion. Consequently, secondary markets are thriving across Europe. In 2025, Milan, Warsaw, and Berlin are growing the quickest, yet companies are progressively exploring areas beyond urban centers.

CBRE predicts that the available capacity this year—assessed in the data center sector by the electricity required to operate it—will be approximately 9.1 gigawatts, with hyperscalers accounting for over one-third.

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