Denmark faces data center reckoning amid power grid strains
COPENHAGEN, Denmark — Long seen as a magnet for data center investment thanks to its stable climate and abundance of renewable energy, the Nordic countries are now weighing limits on the growth of energy-hungry facilities as rising energy demand forces a rethink.
At the center of the debate is Denmark, the first of the Scandinavian countries to confront this question directly, as the formation of a new government and a sudden increase in demands for grid access means new projects are stalled.
Data centers around the world are increasingly facing downside due to concerns about their energy use. in Maine, USA recently approached The backlash against the data center construction ban, and in Pennsylvania, could hurt incumbents ahead of the election. Other states including Virginia and Oklahoma consider moratoriums.
Only two European countries impose a full moratorium on data centers, the Netherlands and Ireland. Both member states have since eased restrictions under certain conditions. But while the AI boom adds to the acceleration in electrification already fueled by the energy transition and digitalization, grid pressures are spreading across the continent.
The ‘hunger games’ of energy policy
In March, Denmark’s state-owned grid operator Energinet temporary A spokesperson told CNBC that new grid connection agreements have been paused due to an “explosion” in capacity demands. Approximately 60 GW of projects are awaiting connection. This far exceeds Denmark’s peak electricity demand of approximately 7 GW. Data centers account for about a quarter (14 GW) of the 60 GW of potential new grid connection projects, the spokesman said.
“If you can’t locate your AI workloads in Denmark, you’ll move them elsewhere and that’s what we’ll see.
Pernille Hoffmann
Managing director of Scandinavians at Digital Realty
An extension of the moratorium cannot be ruled out, Data Center Industry Association (DDI) CEO Henrik Hansen told CNBC.
“We need to be realistic and look at what’s actually available. It’s not really possible to go crazy with all kinds of tie-up deals because the power just isn’t there. We need to lean into that debate and maybe discipline our own industry a little bit more.”
He added that the sudden increase in applications has led to a “fantasy” queue where the gap between what is available and what is requested grows. For this reason, he said that the industry should take a closer look at projects that may not be feasible, adding that the association is demanding more criteria to determine who should be given the highest priority and fastest connections.
“We are very much advocating the need to clear that tail and look at stronger criteria in terms of maturity, actual investment decisions, customers and also social value,” Hansen said. For some countries, such as the Netherlands, the choice between who should have access comes down to a debate about: what’s more important: a data center or hospital.
Sebastian Schwartz Bøtcher, country sales director for the energy management specialist Schneider Electric, described the discussion It’s been referred to on LinkedIn as the “energy policy hunger games” between data centers and businesses. He suggested that certain sectors should not be singled out.
His feelings were also expressed by Tobias Johan SørensenA senior analyst at think tank Concito said no one should be placed at the back of the queue, but there should be different queues based on a set of criteria.
The pause in Denmark is expected to last for the last three months or until Energinet carries out an overall assessment and new measures to increase capacity are implemented. New political agreements and streamlined regulatory frameworks are needed to begin making decisions about how to prioritize the many access requests clogging the queue, Energinet said.
No political decisions have been made as Denmark is currently in the process of forming a new government following general elections. The Ministry of Energy and Climate declined to comment.
Energy Minister Lars Aagaard before the elections He told local media It said it would explore the possibility of giving Danish customers priority network access by putting data centers at the back of the queue.
“I suspect that data centers and battery parks, among other things, are using most of the available capacity on the electric grid,” Aagaard told business news outlet Finance in January, according to comments translated by Google.
It was against this backdrop that questions about moratoriums and who should have priority energy access were discussed at the Danish Data Centers conference in Copenhagen last week.
Risk of falling behind
Gone are the days when you could quietly build data centers, says Joana Reicherts, EMEA data center government affairs director. Microsofthe said during a panel moderated by CNBC at the conference. This statement has been echoed by other hyperscalers and operators who are trying to engage more with communities that have become more aware of the fact that they have huge server warehouses in their backyard.
Denmark had approximately 398 MW of installed data center capacity in 2026, of which 208 MW was under construction. This figure is expected to increase by 1.2 GW by 2030, according to the DDI Association. Hyperscales account for 60% of Denmark’s current capacity.
“You can only wait so long,” said Diana Hodnett, global director of data center public relations, partnerships and economic development. Googlehe told CNBC in an interview. When there is no certainty that the moratorium will be lifted within three months and the outcome is uncertain, then there is an urgent pivot to look at other markets, he said, noting the need to act quickly to serve customers.
“I’m not sure governments and TSOs realize how quickly this can happen,” Hodnett added, referring to the transmission system operators that manage the grid.
A woman walks past a Google-themed barrier outside a Google data center on November 30, 2020 in Fredericia, Denmark. (Photo: Frank Cilius / Ritzau Scanpix / AFP) / Denmark EXIT (Photo: FRANK CILIUS/Ritzau Scanpix/AFP via Getty Images)
Frank Cilius | Afp | Getty Images
Pernille Hoffmann, managing director of Nordics at data center services company Digital Realty, noted how times have changed. “In the past, there’s always been an abundance of power here, so it’s never been an issue. … I think we’re also seeing this huge demand coming from data centers that aren’t very compatible with the distribution network or the grid. So that needs to be taken care of,” Hoffmann told CNBC.
When asked if the temporary pause in network applications would be extended, Pernille said: “I’m afraid it will, but I hope it won’t.”
“If you cannot locate your AI workloads in Denmark, you will move them elsewhere and we will see this. This is true for both Denmark and the Scandinavians as a region. If we cannot provide the areas of need for AI deployments to be located here, they will move elsewhere,” he said.
Some hope that the situation in Denmark will lead to new regulations that could serve as a model for other Scandinavian countries and other European countries. The temporary pause could be seen as a “window of opportunity” to rethink regulation, Energinet Chief Operating Officer Soren Dupont Kristensen said during a panel discussion.
Microsoft’s Joana Reicherts, Google’s Diane Hodnett, Digital Realty’s Pernille Hoffmann, Energinet’s Soren Dupont and Concito’s Tobias Johan Sorensen speak on a panel at the Danish Data Centers conference in Copenhagen. (Data Center Industry)
Data Center Industry
Alistair Speirs, general manager of Microsoft’s Azure Infrastructure, said Ireland eased its moratorium late last year, leading to “one of the most comprehensive regulatory frameworks in Europe for managing large energy users”. Microsoft plans to invest $3 billion in data center capacity in Denmark between 2023 and 2027.
“Our investments respond to the demand of our Danish customers who want to store and process their data close to home and in accordance with EU law,” Speirs told CNBC via email. “We hope to be able to continue to provide our Danish customers with the level of computing power for cloud and AI solutions they demand, in order to support Denmark’s economic competitiveness and the functioning of an increasingly digital society.”
He emphasized that facilities are the basic infrastructure that sustains the modern world.
“The real question is not whether demand for computing power will slow, but how quickly infrastructure and policy can catch up with that demand,” he said.
