Three success factors for the future of German data centres

Key Facts

From 2027, German data centres must use 100 percent renewable electricity.
Air cooling is technically at an end. The new generation of AI hardware means there is no alternative to liquid cooling.
While other EU countries approve data centres in weeks, in Germany it takes over a year. The solution: modular construction.

The digital transformation of the technology, media and telecommunications (TMT) industry is facing a paradoxical challenge. First and foremost, AI-based business models, but also streaming services and cloud applications require more and more computing power. At the same time, the regulatory requirements for sustainability and efficiency in the operation of data centres are tightening dramatically. In particular, the Energy Efficiency Act (EnEfG), which comes into force in 2027, is forcing the industry to fundamentally rethink its approach.

Germany is losing ground internationally. Its market share of global servers has fallen from 3.5 to 2.5 per cent in less than a decade - despite its excellent infrastructure with DE-CIX Frankfurt as an international hub. The main reasons for this are lengthy authorisation procedures, high energy costs and increasingly complex regulations. At the same time, energy demand is rising enormously: from 20 (terawatt hours) TWh per year today to a forecast 31 TWh by 2030, with as much as 80 TWh possible in the long term.

In addition, new data centres will be allowed to achieve a maximum Power Usage Effectiveness (PUE) value of 1.2 from July 2026. By way of comparison, while the global PUE has stagnated at 1.55-1.59 for years, Germany is already significantly better at 1.46. However, a value of 1.2 is a challenge that can hardly be mastered without radical technological and strategic changes.

In future, three success factors will determine who can survive in the German data centre market: efficient energy supply, intelligent water management and accelerated construction processes. Those who fail to master these factors in an integrated manner will fall behind the competition.

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Success factor 1: Rethinking energy supply

The energy issue is of existential importance for German data centres. With electricity costs that are almost twice as high as the European average due to grid charges and levies, energy already accounts for 50 per cent of operating expenses. From 2027, there will also be a legal obligation to purchase 100 per cent renewable electricity. And this will be unsubsidised.

Power purchase agreements (PPAs) are no longer a nice-to-have, but essential for survival. Those who do not conclude long-term direct purchase agreements with renewable energy producers now will face massive compliance problems in 2027. The market for unsubsidised renewable energies is limited. First movers secure the best conditions here.

But PPAs alone will not be enough. The choice of location should also be reconsidered. While latency and connectivity used to dominate, grid capacity and the availability of renewable energy are becoming critical factors. Strategically important locations such as Frankfurt and Berlin are already reaching their limits, so the search for alternatives with better energy infrastructure, such as in the windy north, is becoming increasingly important.

Success factor 2: Water management as a strategic challenge

An average data centre consumes one million litres of water every day. This figure becomes even more dramatic on closer inspection: a single megawatt of data centre capacity with evaporative cooling consumes 25.5 million litres per year. In view of increasing periods of drought and regional water shortages, this situation is more than critical.

This situation is also being exacerbated by the AI revolution. While today's systems operate with 60 kW per rack - i.e. per server rack in which several server units are bundled together and supplied with power and cooling - AI workloads already require 100-150 kW. Air cooling reaches its physical limits here. The consequence is inevitable: liquid cooling will become a basic requirement in the future. The market share of this technology is rising rapidly from 8 per cent (2021) to a predicted 33 per cent (2028).

So one thing is clear: anyone still relying on pure air cooling today is planning for the future. With closed circuits and intelligent rainwater utilisation, fresh water consumption can also be drastically reduced.

Success factor 3: Radically accelerate construction processes

Germany ranks 26th in the international Data Centre Location Index. A damning testimony to the authorisation process. While other EU countries approve data centres in weeks, in Germany it takes years between planning and commissioning. Ireland's Strategic Infrastructure Act shows how things can be done better: large infrastructure projects can be applied for directly from a central authority. And the Netherlands prioritises data centres as infrastructure of supra-local importance.

In addition to such measures on the part of the legislator, a complementary solution lies in consistent modularisation. Prefabricated Modular Data Centres (PFM) with standardised and pre-certified designs reduce construction times to 2-3 years, provided that there are no unscheduled bottlenecks with approvals.

The early involvement of stakeholders such as building authorities, pollution control authorities and grid operators also pays off in the end. The frequent lack of coordination between authorisation and specialist authorities costs months.

One political solution would be to classify data centres as critical infrastructure with simplified approval procedures. Until then, operators must work with the existing framework conditions and utilise them optimally.

The critical point: making waste heat utilisation economical

The German Energy Efficiency Act (EnEfG) requires data centres to use 10 percent waste heat from July 2026, rising to 20 percent by 2028. The potential is huge: from 1 TWh of usable waste heat in 2030 to 3 TWh (2035) and 10 TWh by 2045. In theory, German data centres could then heat 350,000 homes. In practice, however, there are numerous hurdles in the way of this reality.

The temperature level of waste heat from data centres is usually between 25 and 35°C, while district heating networks often require temperatures between 70 and 90°C. Heat pumps to raise the temperature, which would be necessary to achieve these values, require additional energy and incur costs. In addition, the seasonal demand does not match the constant heat supply of the data centres.

There are also structural problems: there is no Germany-wide heating network register, local monopoly structures among heating network operators mean that feed-in is rejected, and amortisation times are often over ten years with unclear responsibility for costs.

Even if all the technical hurdles are overcome: With heat prices of just a few cents per kWh, the effort hardly pays off. The lack of infrastructure is the biggest obstacle. This is because there are often no heating networks close to data centres or they have insufficient capacity. The solution therefore lies in the strategic choice of location and intelligent cooperation models. Data centres must be located where the latest generation of modern heating networks exist or where industrial consumers are directly available.

Fazit: Die integrierte Erfolgsstrategie

Sustainable and competitive data centre operations in Germany require integrated thinking and swift action. As mentioned at the beginning, Germany is already losing market share today, while regulatory requirements will increase in the future.

The roadmap for data centre operators is therefore clear:

Secure PPAs for 100 per cent renewable energy now and increase operating temperatures to over 24°C - this saves 2 to 6 per cent energy per degree without any investment.
Implement modern liquid cooling systems by 2027, establish waste heat co-operations and plan new, efficient systems at an early stage.
From 2028, the aim is to demonstrate 20 per cent waste heat utilisation and develop flexibility services as a source of income.

The data centre operators who master this integration will not only meet the regulatory requirements. They will become sought-after partners in the energy transition, drivers of municipal heating networks and guarantors of digital sovereignty. They will not only be able to stop Germany's loss of market share, but even reverse it.