The Government did not want to wait until September to deliver the final blow to the data center board. Moncloa is about to launch a public consultation imminently on a new royal decree with which it will take full control of the deployment of new data centers in Spain. Promoter companies will have to certify, through responsible declarations, that their projects meet a series of requirements, and it will be the Executive’s responsibility to verify this and, in case of non-compliance, it will be able to stop the projects.
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In other words, the new royal decree places the key to future investments in data centers, which in Spain are mainly concentrated in Madrid and Aragón, in Moncloa’s hands. Furthermore, it opens the door to halting projects already announced by the regional governments themselves, as it will apply to all data centers that have not yet obtained network access permission.
The Executive seeks to anticipate some of the problems that the massive deployment of data centers has triggered in places like Ireland, the Netherlands, or the United States. Sharp increases in electricity prices, imbalances in the electrical grid, or hoarding of energy production are some of the challenges these territories face today. Governments, regulators, and local authorities in the most affected countries are regulating against the clock, even imposing moratoriums on the entry of new data centers.
Moncloa has decided to make a move before the avalanche of projects announced in Spain materializes. The draft royal decree aims to establish a centralized model, once the announced projects have completely exceeded forecasts. The government insists that the national AI strategy foresaw up to 4 gigawatts (GW) of data centers by 2030, but since 2021, permits for more than 12 GW have already been granted to the sector.
The new framework requires promoters to declare to the Ministry of Digital Transformation that the company operating the infrastructure is established in the European Union, as well as that the information it handles will not leave the community perimeter and that third countries will not be able to access its data. If the ministry finds non-compliance, it may withdraw the rights of access and connection to the electrical grid, which in practice means the death of the project.
Water and energy consumption is another point of friction for the construction of data centers, as these require a huge volume of electricity practically 24 hours a day and water for cooling. Therefore, the Government proposes to require promoters to also submit a responsible declaration to the Ministry of Ecological Transition, which will demand the highest energy efficiency category for all projects over one megawatt (MW), in line with the European framework. Additionally, it will verify that 80% of their supply comes from renewable sources.
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But the new decree introduces an extra requirement that threatens to become the real Gordian knot of the sector. Promoters will have to prove that each new megawatt consumed will be accompanied by an installed renewable megawatt ad hoc. In short, that their electricity demand will not be a drain on the entire system, but that they will be supplied by renewable parks built for them, at most, in the 18 months prior to the data center’s start-up. Either in the form of self-consumption or through the signing of forward contracts (PPA).
Data centers, government sources explain, will have to prove supply hour by hour. That is, at least 80% of the green electricity consumed by the center in a given hour has been generated in those same 60 minutes. With this measure, Moncloa seeks to prevent data centers from absorbing the energy that feeds the electrical system from which homes and businesses draw. In other words, that these new consumers do not disrupt the balance of supply and demand.
The Government will process the royal decree through the urgent procedure, and projects under processing will have six months to adapt from its entry into force, three if they are awaiting a network access tender. Moncloa wants the new data center framework to arrive in time for the new electrical grid planning with a 2030 horizon, currently in the study phase, a roadmap that contemplates record investments and is designed precisely to accelerate demand.
The Executive avoids talking about a bubble but does emphasize that behind many projects in the pipeline there are not typical data center promoters, but real estate companies or large electric companies, something that raises suspicions in Moncloa. At the territorial level, the governments of Isabel Díaz Ayuso and Jorge Azcón have classified some data center projects as strategic and have elevated the sector to a key piece of their entire economic policy. If the decree comes into force, they will have to subordinate their plans to the green light of the central Government.