Denmark faces data center woes amid strained power grid

COPENHAGEN, Denmark — Thanks to their stable climate and abundance of renewable energy, the Nordic countries have long been seen as attractive for data center investments, but now they are considering the limits to the growth of power-hungry facilities as soaring energy demand forces them to reconsider.

At the center of the debate is Denmark, the first of the Nordic countries to confront the issue head-on, as the formation of a new government and a surge in requests for access to the electricity grid mean a pause on new projects.

Data centers around the world are facing increasing pushback over concerns about energy usage. In the US, Maine recently came close to banning data center construction, and in Pennsylvania, a backlash ahead of the election could hurt incumbents. Other states, including Virginia and Oklahoma, are also considering moratoriums.

Only two European countries have implemented a complete suspension of data centers: the Netherlands and Ireland. Both member states have since eased restrictions under certain conditions. But the pressure on the grid is spreading across the continent as the AI ​​boom adds to the acceleration of electrification already driven by the energy transition and digitalisation.

Denmark’s state-owned electricity transmission operator Energinet introduced a moratorium on new grid connection contracts in March, citing a “surge” in capacity requests, a spokesperson told CNBC. Approximately 60 GW of projects are waiting to be connected. This far exceeds Denmark’s peak electricity demand of around 7GW. Data centers account for almost a quarter (14GW) of the 60GW of potential new grid-connection projects, the spokesperson said.

Henrik Hansen, CEO of the Data Center Industry Association (DDI), told CNBC that an extension of the suspension period cannot be ruled out.

“We need to be realistic and look at what’s actually available. It’s impossible to really go wild with any kind of connectivity arrangements because the power isn’t available. We need to lean into this discussion and maybe even discipline our industry a little bit more.”

He added that the proliferation of applications is creating a “fantasy” queue that widens the gap between what’s available and what’s requested. Therefore, the industry needs to take a closer look at projects that may not be as viable, he said, adding that the association is calling for further criteria to decide who should be given the highest priority and fastest connections.

“We are making a strong case that we need to clear this queue and consider stronger criteria in terms of maturity, real investment decisions, customers and social value,” Hansen said. In some countries, such as the Netherlands, the choice of who to grant access comes down to a debate over whether data centers or hospitals are more important.

Sebastian Schwartz Bøtcher, Country Sales Director for Energy Management Specialists schneider electricdescribed the discussion on LinkedIn as a “hunger games of energy policy” between data centers and corporations. He suggested that no particular industry should be singled out.

Tobias Johan Sørensen, a senior analyst at think tank Concito, echoed his sentiments, saying no one should be put at the back of the queue, but that there should be different queues based on a set of criteria.

The suspension in Denmark is expected to last three months until Energinet implements the outline and new measures to increase production capacity. A new political agreement and a harmonized regulatory framework will need to be created to start making decisions about how to prioritize the many access requests that are clogging the queue, EnergyNet noted.

Denmark is currently in the process of forming a new government following a general election, so no political decisions have been made. The Ministry of Energy and Climate declined to comment.

Before the election, Energy Minister Lars Aagaard told local media he would investigate the possibility of giving Danish customers preferential access to the grid and putting data centers on the back burner.

“I think data centers and battery parks in particular are taking up a lot of the available capacity of the power grid,” Aagaard told business news outlet Finans in January, according to comments translated by Google.

Against this backdrop, questions about moratoriums and who has priority access to energy dominated the discussion at the Danish Data Center Conference in Copenhagen last week.

Gone are the days when data centers could be built silently, says Joana Reicherts, EMEA Data Center Government Director. microsoftHe said this during a panel discussion moderated by CNBC at the conference. The statement was echoed by other hyperscalers and operators looking to better engage with a community that is waking up to the reality of having giant server warehouses in their backyards.

Denmark has approximately 398 MW of data center capacity installed in 2026, with a further 208 MW under construction. According to the DDI Association, this amount is expected to increase by 1.2 GW by 2030. Hyperscale accounts for 60% of Denmark’s current production capacity.

“It’s a long wait,” said Diana Hodnett, global director of data center communications, partnerships and economic development. googlesaid in an interview with CNBC. If there is no certainty that the suspension will be lifted within three months and the outcome is uncertain, companies should immediately look to other markets, he said, noting that they need to move quickly to serve their customers.

“I don’t know if governments or TSOs understand how quickly that can happen,” Hodnett added, referring to the transmission system operators that manage the electricity grid.

Pernille Hofmann, managing director of Nordic at data center services company Digital Realty, pointed out how times have changed. “Historically, we’ve always had an abundance of power here, so it’s never been an issue. … I think this huge demand is also coming from the power grid and data centers that are not really connected to the power grid at all. So we need to address that,” Hoffman told CNBC.

Asked if the moratorium on grid applications could be extended, Pernille said: “I fear it will happen, but I hope it will not be extended.”

“If we can’t put the AI ​​workloads in Denmark, we’ll just move them elsewhere. And that’s what we’re going to see. And that’s not only true for Denmark, but also for Nordic as a region. If we can’t provide the necessary space to put the requirements needed for AI deployment here, they’ll go elsewhere,” she said.

Some hope that the situation in Denmark will lead to new regulations that could set an example for other Nordic countries and other European countries. EnergyNet chief operating officer Soren Dupont Christensen said in a panel discussion that the suspension could be seen as an “opportunity” to rethink regulations.

Ireland eased its moratorium late last year, creating “one of the most comprehensive regulatory frameworks in Europe for managing large energy users,” said Alistair Spears, general manager of Azure infrastructure at Microsoft. Microsoft plans to invest $3 billion in data center capacity in Denmark between 2023 and 2027.

“Our investment is in response to requests from Danish customers to store and process data under EU law close to home,” Spears told CNBC in an email. “We hope to continue to deliver the level of computing power for cloud and AI solutions that our Danish customers demand, to support Denmark’s economic competitiveness and the functioning of an increasingly digital society.”

He emphasized that these facilities are essential infrastructure to keep the modern world running.

“The key question is not whether demand for computing power will slow, but how quickly infrastructure and policy can catch up,” he said.