New German government & Data Centre

On 6 May 2025, the German Bundestag elected Friedrich Merz as the new Federal Chancellor with the votes of the CDU/CSU and SPD parties - also to implement government projects in the data centre industry.

Friedrich Merz is a lawyer and was a long-standing partner in an international US law firm. Friedrich Merz's election is based on the coalition agreement between the CDU/CSU and SPD parties. The coalition agreement is not a legally binding contract, but rather a memorandum of understanding that describes the basis for cooperation and the political agenda for this legislative period.

The term “data centre” is used explicitly seven times in the coalition agreement. In our view, this demonstrates the significantly increased political interest in the data centre industry. Moreover, a Federal Digital Ministry is also to be created newly. Some points from the coalition agreement that are essential for the data centre industry:

Government demand for data centre services: The state shall become an anchor customer for the digital economy. “Digital sovereignty” shall be achieved primarily through private IT service providers. The goal is end-to-end digitization (an interoperable and European-compatible sovereign German stack) and digitally compatible laws. The federal state wants to strengthen its networks and data centre, among other things through the German Government Cloud (DVC).

The state also wants to become an anchor customer for the key technologies of AI and quantum technologies: At least one ”AI gigafactory” is to be established in Germany, high-performance data centre are to be set up and/or expanded, and the development of high-performance quantum computers shall be accelerated.

Support of data centre developments: Germany's position as a data centre location shall be strengthened “as a lighthouse for Europe” and regional and decentralized data centre clusters shall be supported. The construction and expansion of data centre, “especially in eastern Germany”, is to be accelerated, and the planning and integration of data centre into the power grid is to be facilitated (also through ”more transparency of grid connection capacities”). The development of edge computing is also to be promoted.

Facilitating data centre operations: Regulatory density and electricity costs are to be reduced. Data centre operations are to be facilitated through practical interpretation and amendment of the relevant regulations (in particular the “practical” implementation of climate neutrality, e.g. easier feed-in of waste heat into district heating networks).

The current electricity price compensation scheme is to be extended and include data centre operations. [In addition, the electricity tax is to be reduced to the European minimum and grid fees are to be reduced and capped; electricity costs shall be reduced generally by 5 cents per kWh, although this is subject to financing].

These projects are correct and well set. The implementation is a political task for the new Federal Minister of Digital Affairs, Dr Karsten Wildberger (former CEO of Germany's largest electronics retail chain). Achievement of the goals depends on many factors, particularly financing in the case of expenditure-related issues. We shall revisit the matter and summarize after around 100 days.