Europe has a growing need for data centres capable of handling new AI services, and which can run on sustainable energy.
DTCP, the investment business spun out of Deutsche Telekom, is investing £1bn in GreenScale, a company building data centres across Europe to meet the growing computing needs brought by artificial intelligence.
Many of the companies developing the large language models underpinning AI are being developed in the US and China, and Europe is struggling to catch up. But DTCP still expects Europe to need to cater for a boom in data centre capacity brought on by new AI services.
“The data centre sector has enjoyed strong growth for many years,” says Zahl Limbuwala, operating partner at DTCP. “But now it’s starting to see growth on growth with the emergence of AI and AI-enabled applications.”
Limbuwala says that while part of the expectation for the AI-driven boom comes from the excitement surrounding headline-grabbing large language models, that is by no means the full story.
“Large language models like ChatGPT and Gemini caught the public eye, and while it can look like they are the beginning, middle and end of artificial intelligence, that’s not the case,” he says.
“There are those that are less visible to the public, such as predictive models used in factory automation and logistics.”
GreenScale plans to build a data centre two campuses with a combined capacity of 170MW. They will be split across the Irish border, with one in Donegal in the Republic of Ireland, and one in Derry, Northern Ireland.
“You don’t bring a data centre company to market of this size and scale without addressing cloud service providers.”
Zahl Limbuwala, DTCP
For customers, DTCP have an eye for cloud service providers, who are the largest traditional users of data centres.
“You don’t bring a data centre company to market of this size and scale without addressing that group. They’re the biggest buyers in town.”
But it’s not just for customers making standard cloud service offerings. Limbuwala says there is a “newer vertical” of providers, sometimes called neo-cloud companies, which fill up data centres with high-end GPUs, like Nvidia’s Blackwells, so they can target customers with specialised needs in AI or high-performance computing.
“These are relatively new companies that are focused on providing GPUs as infrastructure,” he says. “Whether that’s to enable the training of large language models or the inference on those models when they are used. Those companies are becoming large tenants and consumers of capacity in data centres.”
Businesses around the world are thinking about how to incorporate AI into their operations. It’s a safe bet to expect this to drive data centre demand over the coming years. Fortune Business Insights, a research company, projects cloud computing to grow from $676bn this year to $2.3trn in 2032.
Power struggle
One of the advantages that DTCP sees in GreenScale is that it can tackle some of the energy power consumption challenges that AI brings to the data centre sector.
Data centres already consume enormous amounts of power. Climatiq, a carbon footprint research company, estimates global emissions from cloud computing range between 2.5% and 3.7% of the global total, which is more than commercial aviation. With demand likely to outpace the transition to greater use of renewable energy, it will be increasingly hard for users and suppliers to hit their emissions targets as international regulations tighten.
With the growth of AI the situation becomes worse. GPUs use considerably more power than conventional cloud services require. So, while the seemingly unstoppable rise of AI demand in Europe presents a great opportunity, it makes finding a sustainable solution far more urgent.
Ireland, which drew major tech companies like Amazon, Meta and Google, to set up large-scale data centre operations in the country, is now finding that these are using around 20% of the country’s electricity, as well as vast amounts of water to keep them cool. Irish local government has started to push back on proposed developments, with South Dublin County Council rejecting one from Google in August 2024 because they could not be assured over power consumption.
Limbuwala says GreenScale is positioning itself to take on these challenges, which he thinks are most acute in urban European data centre hubs like Dublin, London, Frankfurt and Amsterdam.
“GreenScale is about looking at new markets that have less of those constraints,” he says. “[Those] with more abundance of land, good connections to the grid, and probably most importantly, the opportunity in the near and long term for access to renewable energy.”
Eventually GreenScale plans to expand to 1GW in total across campuses in various European regions, including the Nordics. Limbuwala says that the geography will lend itself to securing renewable sources of power for the data centres.
“Wind and solar are predominant in some parts of Europe and the Nordics. There is also hydro power and then there’s a range of emerging technologies [to consider], whether that’s hydrogen or possibly even small nuclear reactors. Greenscale is about [accessing] those larger, newer markets with a path ahead for access to renewable energy.”
