Challenges to the development of new data centres in Germany

Energy supply shortages and urban planning requirements

Finding of suitable locations for the development of new data centres in or around the metropolitan areas of Germany is becoming increasingly challenging for data centre developers, due to two main reasons: a shortage of available electrical energy and hurdles in obtaining relevant permits.

Energy supply

Against the backdrop of the energy transition, Germany's energy supply is currently being fundamentally transformed from fossil fuels to renewable energies. Germany has set the goal for renewable energies to cover at least 80% of its electricity consumption by 2030 (section 1 sub-section 2 of the Act for the Expansion of Renewable Energies).

The energy transition set in motion a vast expansion of renewable energy production facilities. However, these will need to increase very substantially to achieve the formulated goals and ensure a sufficient and reliable electricity supply. In addition to the creation of renewable energy production capacities, a massive expansion of the electricity infrastructure (e.g. high and medium-voltage lines, substations) is required and conducted by transmission and distribution grid operators to ensure that the electricity generated from renewable energy sources can be made available to customers.

Multiple legislations have been passed to promote this undertaking, such as the “Act on the Improvement of Climate Protection in Immission Control, Acceleration of Immission Control Approval Procedures and Implementation of EU Law”, which was recently adopted in July 2024 and aims at the acceleration and reduction of bureaucracy in approval procedures.
These fundamental changes in the German energy supply and infrastructure represent an important challenge for the rapidly growing data centre industry. As a significant user of electricity, a sufficient and reliable power supply is the most important criterion when inspecting locations for new data centres. Therefore, almost every new data centre development project includes the conduct of feasibility studies by the respective distribution grid operators. In recent times these studies often show that the existing electricity infrastructure and capacities are not sufficient for the contemplated project and/or long waiting time for the construction of the required infrastructure.

In some cases, data centre developers have decided to build some of the required infrastructure themselves to ensure the necessary and timely power supply. For example, they may construct substations on site, install their own regional power supply lines, or even produce their own electricity. Such projects however are associated with considerable costs, the need for availability of additional land and various legal issues, such as the need of agreeing with potentially multiple third parties on rights of use and passage or regulatory aspects with regard to power distribution.

Urban planning requirements

As a principle, and depending on their nominal rated power load, data centres are considered “not significantly disturbing commercial businesses” and are permitted in commercial and industrial areas, unless special provisions have been implemented in the local planning regulations. Data centres are thus in direct competition for space with other commercial businesses and industries.

In the light of the rapidly increasing number of data centre development projects, certain municipalities have started to issue specific urban planning regulations to steer the development of data centres within their boundaries.

The city of Frankfurt am Main and Offenbach for example, enacted urban development concepts that provide that construction of new data centres shall only be approvable in certain dedicated suitable areas or restricted suitable areas, thus limiting the space for new developments.

The concepts do not have a direct legal impact but their content need to be considered by the municipalities when preparing or amending binding development plans, on the bases of which building permits are then applied for and issued.

Until new binding building plans are established, municipalities can issue a so-called “interdiction of change” (Veränderungssperre) (section 14 German Building Code) to safeguard the planning. Projects that are part of the area concerned by the interdiction of change can then no longer be approved from this point onwards.

Outlook

The overall combined impact of the shortage of available power and augmented regulations to steer the location of new data centres development projects is yet to be seen.

The two issues are often connected: data centres are driven to the peripheries due to site shortages and urban planning restrictions but face a lack of adequate power infrastructure in the designated areas, resulting in delays and costly infrastructural measures. Therefore, any new development project should include an upfront examination of the creation of the required building law and a feasibility study on the capacity and timing for adequate power supply.

For more information, please contact Dr. Dirk Barcaba and Elie Kaufman, LL.M.