Europe Data Center Market

Europe Data Center Market Forecast

• The Europe Data Center Market is expected to reach a market size of US$ 189.3 Bn by 2032 currently at US$ 82.8 Bn in 2025, resembling strong growth with 12.6% CAGR during this period.
• The Europe Data Center Market is anticipated to benefit from strong demand driven by increasing digitalization, cloud computing, and the growing need for data storage.

Data Center Market Insights

1. There is an emphasis on sustainability with European data center operators adopting energy-efficient technologies, renewable energy sources, and eco-friendly cooling systems to meet environmental standards and reduce carbon footprints.
2. The rise of edge computing to reduce latency and improve performance in remote locations is reshaping the data center market.
3. Tier-3 data center is projected to account for over 50% market’s revenue in 2025, driven by increasing demand for reliability, redundancy, and scalability in cloud services and enterprise applications.
4. The expansion of 5G connectivity is leading to increased data generation, creating a greater demand for the construction of additional and edge data centers.
5. Germany dominates the European data center market, driven by its robust infrastructure, strategic location, energy efficiency initiatives, and strong demand for cloud and digital services.
6. Rising energy costs and limited availability of land in key data center locations are influencing investment decisions and operational models.
7. Increased emphasis on data sovereignty concerns, making local data centers more attractive to enterprises requiring compliance with EU regulations.
8. The increased reliance on artificial intelligence (AI) and big data analytics requires significant computational power and storage, driving investments in data center infrastructure to handle these demands.

A Look Back and a Look Forward- Comparative Analysis

The historical growth of the Europe Data Center Market has been largely driven by the rapid digitalization of industries, increased internet penetration, and the surge in demand for cloud services. As businesses across sectors transitioned to more data-intensive operations, the need for robust, scalable data infrastructure became more pronounced. The rise in e-commerce, media streaming services was a major contributor to the demand for data center services. The market also experienced a shift towards more sustainable and energy-efficient practices, with an increasing focus on green data centers powered by renewable energy sources.

Looking ahead, the Europe Data Center Market is expected to experience robust growth due to the emerging technologies such as 5G, AI, and machine learning, along with increasing demand for high-performance computing and cloud solutions. As data generation accelerates, there will be a stronger need for real-time data processing, prompting the expansion of decentralized data facilities. The growing regulatory pressure to reduce carbon footprints and meet the EU's climate goals will push data center operators to focus on energy efficiency and sustainability in their design and operations.

Key Growth Determinant

• Rapid data consumption fuels the need for data centers

Video streaming has become a dominant force in data consumption, accounting for 66% of global mobile data traffic in 2024, with users spending around 100 minutes daily on mobile apps. In Europe, high-speed internet and mobile connectivity have centralized services like Netflix, YouTube, and Amazon Prime in daily life, driving substantial bandwidth demand for high-definition and 4K streaming, requiring robust data center support for seamless content delivery.

At the same time, 94% of EU households had internet access in 2024, up from 80% in 2014, while 93% of individuals aged 16-74 used the internet in the preceding three months, marking a 7% rise since 2019. The shift to remote work has increased cloud reliance, with 52.9% of EU enterprises conducting remote meetings and 13.5% adopting AI technologies, while 15.1% had internet connections above 1 Gb/s. With global data volume projected to reach 175 zettabytes by 2025 and the EU data economy expected to grow to €829 billion, the demand for advanced data storage and processing infrastructure continues to accelerate.

Key Growth Barriers

• Rising power consumption and local challenges

The increasing demand for electricity from data centers is a growing concern in Europe, with data centers consuming approximately 3% to 4% of the EU's total electricity in 2024. This share is expected to rise significantly in the coming years, placing additional strain on already stressed energy grids. Power consumption by data centers is projected to triple by 2030, requiring a significant increase in electricity supply, primarily from low-carbon sources, to meet both residential and industrial needs. Europe's data center power consumption is expected to reach 150 terawatt hours (TWh), up from more than 60 TWh in 2024.

The data center projects often face local opposition, commonly referred to as NIMBY (Not In My Back Yard), driven by concerns over environmental impact, noise, and traffic. In addition, challenges in securing sufficient power connections and overcoming local resistance have led to delays in data center projects across countries such as Germany and the Netherlands. These delays hinder the expansion of digital infrastructure, potentially affecting Europe’s ability to compete in attracting global tech investments.

Data Center Market Trends and Opportunities

• Shifts toward hyperscale and megascale data center campuses

The European data center market is undergoing rapid evolution, driven by the escalating demands of artificial intelligence (AI), cloud computing, and digital services, necessitating expansive, high-capacity infrastructure. Hyperscale and megascale data centers, often exceeding 100 megawatts (MW) of power capacity, are being developed to meet these needs. For instance, in Ireland, hyperscale facilities operated by AWS, Google, Meta, and Microsoft account for 77% of the country’s data center capacity, while the Netherlands, particularly Amsterdam, continues to expand as a major data center hub in Europe due to its strategic position and robust digital infrastructure.

In 2025, Europe is projected to add a record 937 megawatts of new data center capacity, a 43% increase from 2024, with Frankfurt, London, Amsterdam, Paris, and Dublin hosting over half of this growth. Governments are actively supporting this expansion, such as the UK announced £14 billion in data center projects under a new AI action plan, and France secured €109 billion in AI sector investments. Further strengthening the market, the EU launched the €20 billion InvestAI initiative in early 2025, focusing on the development of AI-centric data centers or AI gigafactories.

• Renewable energy integration

The European Union has set ambitious renewable energy targets, aiming for a minimum of 42.5% renewable energy in its overall energy mix by 2030, with aspirations to reach 45%. In 2024, renewables accounted for 48% of electricity generation in the EU, up from 45% in 2023. This policy shift is encouraging data centers to adopt renewable energy sources to align with the EU's climate objectives. Denmark leads the EU with the highest share of renewables in its net electricity generation at 88.4%, primarily from wind, followed by Portugal (87.5%, mostly wind and hydro) and Croatia (73.7%, mostly hydro).

The Climate Neutral Data Centre Pact, backed by the European Commission, commits data center operators to achieve climate neutrality by 2030. New data centers in cool climates must meet a Power Usage Effectiveness (PUE) target of 1.3 by January 1, 2025, while those in warmer climates will need to meet a PUE of 1.4. Existing data centers will be required to meet these targets by 2030. Additionally, initiatives such as the REPowerEU plan accelerate the clean energy transition, offering financial incentives and facilitating power purchase agreements to support renewable energy investments. Advancements in energy storage technologies, such as batteries and pumped hydro are also enhancing renewable energy integration into the grid.

Leading Segment Overview

• Colocation data centers gains traction amid growing demand for scalable and secure solutions

Colocation data centers are anticipated to account for more than 25% share of the Europe data center market in 2025, due to increasing demand for cost-effective, scalable, and secure solutions. Many businesses prefer colocation services to avoid the high upfront costs of building and maintaining their own infrastructure. The rise of cloud services and the need for data sovereignty regulations drive the demand for colocation facilities in Europe.

Edge data centers are expected to grow rapidly due to the rising demand for low-latency data processing driven by 5G, IoT, and AI technologies. The increasing number of IoT devices and digital services across sectors further boosts the need for localized infrastructure.

• Tier-3 Data Centers Set to Lead Market with Exceptional Reliability and Redundancy

Tier-3 data centers are anticipated to account for over 50% of the market share in 2025. These are highly reliable facilities that offer a significant level of redundancy and continuous power supply. They are designed to provide 99.982% uptime, ensuring a maximum of 22 minutes of downtime annually. These centers are capable of handling complex workloads, making them suitable for businesses with stringent operational demands. They typically offer N+1 redundancy in power and cooling systems, ensuring uninterrupted operations even in the event of component failure.

Country Analysis

• Germany is the largest market for data center amid AI and cloud technology growth

The proliferation of artificial intelligence (AI) applications and the growing reliance on cloud computing are key drivers of data center demand in Germany. AI workloads, particularly large language models, require substantial computational power and storage capacity, necessitating advanced data center infrastructures. For instance, Microsoft announced an investment of €3.2 billion ($3.44 billion) to expand AI and cloud capabilities in Germany, while Amazon Web Services (AWS) plans to invest €7.8 billion to strengthen its cloud services in the country.

Germany’s commitment to environmental sustainability and strict data protection regulations is further shaping the data center market. The Energy Efficiency Act mandates the use of renewable energy and waste heat recovery systems in data centers, aligning with EU energy efficiency directives. Additionally, regulations such as the Bundesdatenschutzgesetz (BDSG) emphasize data sovereignty, making Germany an attractive destination for global technology firms handling sensitive information.

• UK's digital transformation and cloud shift propel data center investments and demand

The increasing adoption of cloud-based services, including IaaS, SaaS, and PaaS, has significantly boosted the demand for data centers, especially in sectors such as finance. Banks and fintech companies rely heavily on these centers to manage vast amounts of sensitive data, while e-commerce giants such as Amazon, ASOS, and eBay in the UK are driving the need for efficient data storage and processing. As these retailers shift from on-premise IT infrastructure to third-party cloud services in local data centers, the demand for low-latency and efficient data handling continues to grow.

The UK government’s commitment to becoming a global AI leader has led to over US$ 32 billion in data center investments since July 2024, emphasizing their role in supporting AI development. Additionally, the cybersecurity sector in the UK has experienced growth, with 2,165 firms generating US$18 billion in revenue in 2025, further increasing the need for secure data centers. The UK public sector’s digital transformation, which involves US$ 35 billion in annual spending on digital technology, also requires robust data center infrastructure to ensure the delivery of efficient public services.

• Advancing digital infrastructure and sustainability in the Nordic region

Governments across the Nordic countries have made digitalization a key focus of their economic strategies. Finland's Statistical Programme 2024–2028 highlights efforts to improve digital services and data infrastructure to support research and information management, while Sweden's AI Commission roadmap emphasizes the need for robust digital infrastructure to foster AI and data-driven innovations. The region’s renewable energy resources, particularly hydroelectric and wind power, play a vital role in powering energy-intensive data centers, making it an attractive destination for sustainable investments.

Nordic countries also offer a favorable regulatory environment, with streamlined permitting processes, tax incentives, and policies that promote sustainable construction practices. This, combined with advanced telecommunications infrastructure and a highly skilled workforce in IT and engineering, strengthens the region's appeal for data center operations. Microsoft’s US$33.7 billion investment in data centers in Sweden underscores the importance of the global digital infrastructure landscape, while its commitment to securing 1,000 MW of renewable energy aligns with both local sustainability goals and the company’s efforts to reduce its carbon footprint.

Competitive Landscape

Key players are focusing on building advanced, energy-efficient data centers to stay ahead in the market. This includes adopting innovative cooling systems, renewable energy solutions, and automation technologies. The push for energy efficiency is especially critical in Europe, where regulatory frameworks and sustainability goals play a significant role in shaping industry practices.  

• In April 2025, Colt Technology Services announced the divesting of eight data centers in Europe to NorthC as part of its focus on sustainable digital infrastructure and the AI economy. The sale, which includes approximately 400 colocation customers, follows Colt's 2023 acquisition of Lumen EMEA assets and expands NorthC’s regional presence in Europe.
• In October 2024, IBM opened its first quantum data center in Europe, located in Ehningen, Germany. This marks the company's second quantum data center globally. The center includes two IBM Quantum Eagle-based systems and will soon feature an IBM Quantum Heron-based system. These advanced systems offer capabilities beyond classical computers, allowing more powerful computations.

Key Companies

• Google LLC
• Equinix Inc.
• IBM Corporation
• Microsoft Corporation
• Cisco Systems, Inc.
• Dell Technologies
• Schneider Electric
• Hewlett Packard Enterprise
• Huawei Technologies Co., Ltd
• Fujitsu Limited
• ABB
• Comarch SA

Expert Opinion

• Cooling systems are essential to maintain operational efficiency and longevity of hardware by regulating temperature. Innovations such as immersion cooling are becoming increasingly prevalent to reduce energy consumption.
• AI and machine learning are increasingly used to optimize data center operations, including energy management, cooling, and predictive maintenance.
• The demand for faster data processing increases, and edge data centers are being established closer to the end user to reduce latency.
• Manufacturers are increasingly adopting IoT, robotics, and automation, creating the need for secure and scalable data centers to handle vast amounts of operational data.

Europe Data Center Market is Segmented as-

By Component 

• Hardware
• Power Systems
• Cooling Systems
• Data Center Racks
• Misc.
• DCIM (Data Center Infrastructure Management) Software
• Cloud-based
• On-premises
• Services
• Professional Services
• Integration & Implementation
• Consulting
• Support & maintenance
• Managed Services

By Data Center Type

• Enterprise Data Centers
• Edge Data Centers
• Colocation Data Centers
• Hyperscale Data Centers
• Cloud Data Centers
• Managed Data Centers
• Modular Data Centers

By Data Center Tier

• Tier-1 Data Center
• Tier-2 Data Center
• Tier-3 Data Center
• Tier-4 Data Center 

By Industry

• IT & Telecom
• BFSI
• Manufacturing
• Healthcare
• Government
• Misc. 

By Country

• Germany
• UK
• France
• Italy
• Spain
• Benelux
• Nordics
• Rest of Europe