Germany’s Data Center Expansion Faces Setbacks as Energy Rules Shift

Several major data center proposals have failed in Germany over the past 18 months. Stack Infrastructure canceled a $3 billion facility in Hesse, while state-run Komm.ONE withdrew from a project in Baden-Württemberg.

The precise causes of these data center development setbacks remain unclear. However, Komm.ONE pointed directly to the burden created by Germany’s Energy Efficiency Act.

Data center developers face pressure over waste heat

Graichen argues that the industry’s opposition to the rules is unfounded. In his view, the availability of thermal offtake—the ability to use recovered heat—should be the default criterion for developers searching for new data center sites. “Stop complaining,” he says.

When a suitable offtake opportunity is available, recycling heat generated by a data center is relatively straightforward. “There is no technical reason why data centers cannot utilize waste heat; the technology and concept are well known,” says John Booth, managing director of IT consultancy Carbon3IT.

The EU-wide energy efficiency targets for data centers reflect this focus, Booth says. “There is absolutely no reason to do it other than the will of the organization.”

Revised Energy Efficiency Act could ease development rules

Under the revised Energy Efficiency Act, data center developers are required only to assess whether heat recycling is economically and technically feasible. If it is not considered feasible, the requirement can be waived.

“With practical rules for data centres, we are creating the conditions for digital sovereignty and economic growth,” Federal Minister of Economy and Energy Katerina Reisch said when the Cabinet approved the changes.

The amendment could unlock pent-up demand among developers seeking to build data centers in Germany. The country’s central geographic position makes it easier to route data efficiently to Western and Eastern Europe. “It reduces the risk that people find the German market unattractive,” Smitten says.

Could looser rules trigger new opposition?

The changes could also undermine their stated goal of encouraging new construction if they fuel the kind of climate-focused opposition that has contributed to data center freezes and moratoriums in the United States.

In February, the city council of a small German town voted to block construction of a $2.5 billion data center project, partly because of concerns about climate change.

The debate is likely to become more complex across Europe as policymakers balance efforts to strengthen domestic artificial intelligence capabilities with climate goals. Public concern about those trade-offs is also growing.

Over the past year, the way people think about data centers has “completely changed,” Graichen says. “First and foremost in the United States, but something similar will happen in Europe as well.”