Spain and Portugal are emerging as the new powerhouses for artificial intelligence infrastructure, thanks to their abundant low-cost renewable energy. According to a recent report from Aurora Energy Research Ltd, these two southern European nations are poised to see their data center power consumption skyrocket by more than eightfold over the next decade. This explosive growth can be attributed to a perfect storm of factors: a wealth of solar and wind energy, robust grid reliability, and extensive fiber connectivity.
The Iberian Peninsula is not just a pretty face in the energy game; it offers a security of supply that ranks among the best in the world, all while maintaining low spot energy prices. Javier Pamos, an analyst from Aurora, points out that this combination makes Spain and Portugal particularly attractive for investments in AI-driven data centers, especially when compared to higher-cost countries like the UK and Germany. As generative AI continues to gain traction, companies are increasingly eyeing data centers as lucrative revenue streams.
Utility giants like Iberdrola and solar developers such as Solaria Energia y Medio Ambiente are stepping up to the plate, forming joint ventures to tap into this burgeoning market. Meanwhile, real estate firm Merlin Properties has raised nearly €1 billion to expand its data center operations. Even construction companies like Actividades de Construccion y Servicios are getting in on the action by establishing dedicated units for data center development. In Portugal, investment firms like Davidson Kempner Capital Management are backing new data centers in Sines, which is located just south of Lisbon.
What does this mean for the future? Aurora projects that the annual power demand from Iberian data centers, currently sitting at about 2.8 terawatt-hours, will balloon to 21 terawatt-hours by 2035 before leveling off. This surge in demand will help absorb the excess energy generated from the region’s renewable sources, which is a win-win for both the energy sector and the environment.
Moreover, the region’s liquid market for power purchase agreements adds another layer of appeal, particularly for data centers that require a steady supply of clean energy. However, it’s not all smooth sailing; the hot temperatures in certain parts of the Iberian Peninsula could complicate matters by raising cooling costs for data center operations. This challenge underscores the importance of strategic planning in the face of climate variability.
As Spain and Portugal position themselves as the go-to locations for AI data centers, the ripple effects on local economies, job markets, and energy policies could be profound. The interplay between renewable energy and technology is creating a new narrative, one where energy costs and sustainability are pivotal in shaping the future of the tech industry. The stage is set for a transformative decade, and the world will be watching closely as these nations harness their natural resources to fuel the next wave of technological innovation.
