Europe’s data centre challenge – from energy demand to grid support

In the study on the TSO perspective on data centres, ENTSO-E points to the rapid growth of AI and digital services in transforming the role of data centres in the power system to becoming systemically relevant electricity loads whose behaviour increasingly affects secure grid operation.

With total data centre electricity demand in Europe expected to grow by more than 50% between 2025 and 2030, driven primarily by colocation and hyperscale expansion concentrated in established metropolitan hubs, this growth poses challenges for the electricity TSOs.

ENTSO-E in the study highlights data centres as not only large-scale localised loads but also having software-driven load profiles that can introduce stability risks, some of which manifest at speeds and frequencies that conventional SCADA systems cannot detect.

For this, phasor measurement units with high resolution sampling are required for identification and analysis.

In addition operational model­ling tools are necessary in order to investigate dynamic behaviours of large data centres and interactions among them. Their UPS-based power architectures can instantaneously disconnect hundreds of megawatts during minor grid disturbances, potentially amplifying problems to safe grid operation and power quality.

If this risk of sudden large load disconnection persists, TSOs may be forced to operate at a lower renewable energy source penetration level.

Updated or new connection require­ments are an essential first step to ensure system stability, ENTSO-E recommends.

Data centre concentration

Another issue is that the concentrated deployment of data centres in already constrained regions is straining transmission capacity and may, over time, also challenge generation adequacy, as already seen in the US and Ireland, ENTSO-E continues.

At the same time, access to power is critical for data centres, and connection lead times – ranging from a few years to more than a decade – are now the sector’s most frequently cited concern.

ENTSO-E states that addressing this mismatch requires actions on multiple fronts including better information on data centres capacity needs, timelines and demand projections and greater transparency on aggregated grid hosting capacity and allocation processes.

Data centre opportunities

However, some of the same technical characteristics that create these stability and planning challenges also present an opportunity, the report continues.

The same control capabilities needed for grid-safe operation also form the foundation for active grid support and market participation.

The power electronics, battery systems, cooling infrastructure and controllable IT workloads embedded in data centres can, under the right regulatory and market frameworks, be leveraged as active grid resources.

Updated connection codes can ensure grid-safe behaviour both dur­ing faults and normal operation and trans­parent hosting capacity information and reformed grid con­nection capacity allocation processes can steer development towards regions where the grid can accommodate new load.

Flexible connection agreements can help close the time-to-power gap.

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However, the challenges to realising this potential should not be understated, ENTSO-E adds, noting that the actual flexibility available to the power system depends very much on the workload mix and per-site capability, with IT workload potentially able to be swiftly shifted in time or location unlike industrial processes, but also on the data centre business model.

Providing flexibility services could conflict with the core data centre business by creating additional costs and operational constraints and their deployment is therefore likely to depend on the policy and regulatory framework, as well as on the sustainability targets of data centre owners and operators.

In practice, the hyperscalers are generally best posi­tioned to provide flexibility, ENTSO-E suggests. Colocation data centres face tenant control barriers, while enterprise sites have limited potential.

The report closes noting that the size and impact of data centres on grid planning and grid operation require a coordinated approach, under a broader framework of European and national authorities. 

The window of opportunity is defined by the speed of data centre deployment itself: the frameworks must be in place before the next wave of capacity reaches the grid, not after.