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European Union and UNECE move to regulate data centre expansion
29/9/2026
News
In response to power demand pressures across the continent, the European Commission (EC) has proposed a common rating scheme for data centres to improve energy disclosure and support integrating large computing facilities into the European Union (EU) electricity grid.
The scheme is said to be specifically designed to address increasing power demand from artificial intelligence (AI) models and cloud computing infrastructure. It includes energy consumption, water use and waste heat recovery at data facilities in member states.
On 21 September 2026, the EC implemented the rating scheme under Directive (EU) 2023/1791. The regulation requires the European database on data centres to issue electronic sustainability labels annually starting 15 August 2027 and applies to operators of data centres with an installed IT power demand of at least 500kW. The system assigns standalone ratings from A to G across two performance metrics: energy efficiency, measured by power usage effectiveness (PUE) and water usage, measured by water usage effectiveness (WUE). Labels also display site location, grid flexibility contributions, waste heat recovery readiness and renewable energy sourcing details.
In a report explaining the new rating scheme, the EC said that rating data centres gives visibility to good practices and promotes new designs or efficiency interventions in new or existing data centres that can reduce energy and water consumption, increase the use of low-emission energy, improve grid efficiency or promote the reuse of waste heat in nearby facilities and heat networks.
Elsewhere, the United Nations Economic Commission for Europe (UNECE) projects global data centre electricity consumption will rise from 485TWh in 2025 to 950TWh by 2030, representing 3% of global electricity use. To support this growth, annual global capital expenditure on data centres is expected to increase from $800bn in 2026 to $1.8tn by 2050.
UNECE reports that while data centres can take two to five years to build, developing electrical transmission networks takes over a decade due to planning requirements. This has led Ireland to impose connection restrictions in Dublin and the Netherlands to limit local planning approvals due to network and land constraints.
To mitigate these operational risks, UNECE is calling for better data transparency, standardised reporting and conditional grid connection frameworks to align facility locations with power grid capacities.
Data centre electricity consumption grew 17% in 2025, according to findings published by the International Energy Agency (IEA). During the same period, electricity consumption by AI-focused data centres increased by 50%. Technology firms invested over $400bn in capital expenditure in 2025, with a projected 75% increase in 2026. Combined, the top five technology firms’ capital expenditure now exceeds global annual investment in oil and natural gas production.
AI model providers saw a threefold increase in active users and a fivefold increase in revenue in 2025. However, severe supply chain bottlenecks in high-bandwidth memory chips are limiting AI server production, with shortages expected to continue through 2027. Beyond memory chip shortages, data centre developers face transformer lead times of two to three years and gas turbine delivery queues of five years. Further complicating logistics, conflict in the Middle East has disrupted global helium supply chains, a critical material for semiconductor cooling.
