How data centre flexibility can help solve Europe’s grid bottleneck
Operating data centres more flexibly could slash their contribution to peak power demand by up to 45 percent in 2035, avoiding 4 gigawatts of fossil backup, a new Agora and Deloitte study finds. The upcoming EU Tech Sovereignty Package should harmonise connection processes, provide robust economic signals, and integrate data centres into energy planning to incentivise their more flexible operation.
Brussels, Paris, 20 April 2026. Driven by the rise of artificial intelligence (AI), Europe’s electricity consumption could increase by 2–4 times by 2035, adding to the pressure on the continent’s grids and posing challenges to both digital and energy transitions, according to a new analysis by think tank Agora Energiewende and consultancy Deloitte. With data centre grid connection lead times now stretching up to 7–10 years, the paper lays out a feasible path to accelerate sustainable digital growth.
Requiring data centres to operate flexibly for just 120 hours per year – using workload-shifting and backup generation such as batteries – would avoid the need for 4 gigawatts (GW) of additional peak capacity. In today’s energy landscape, this capacity is almost exclusively provided by expensive, carbon-intensive gas-fired plants. Drawing a direct link between digital policy and energy security, the findings come at a critical moment as the European Commission prepares the Tech Sovereignty Package and Europe faces second energy price shock in four years.
“Digital growth and energy security are not a trade-off – operating data centres more flexibly can reduce reliance on volatile fossil gas, cutting system costs and emissions,” said Frauke Thies, Director Europe, Agora Energiewende. “By including clear flexibility incentives in the Tech Sovereignty Package, the EU can align rapid digital expansion with its competitiveness, climate and security goals.”
Solving the ten-year wait
The current grid pressure has led to increased connection queues for both decentralised electricity generation and large consumers such as data centres, with connection times of up to ten years. Several European regions or cities such as Dublin or Amsterdam have even enacted moratoriums on new data centre connections.
These trends risk jeopardising the European ambition to triple the continent’s data centre capacity within the next 5 to 7 years. However, the study shows that Flexible Connection Agreements (FCAs), which grant faster connection in exchange for flexibility requirements, could speed up new data centre connections while reducing additional grid stress. Instead of waiting a decade for significant physical grid expansions, data centres that agree to adjust their load during the most stressed hours of the year could thus be granted expedited access.
“A 10-year wait for a grid connection is a major barrier for European AI and cloud competitiveness,” Johannes Trüby, Deloitte’s Energy and Climate Economics partner, said. “We need to do better, and we have now proven technology to do so. It is now essential to design the regulatory framework to provide the necessary incentives and guardrails for the industry to grow accordingly.”
The economic and strategic benefits
The study explores how varying levels of data centre flexibility affect the power sector by simulating the operation of the electricity system in 2035. It assesses three scenarios: a reference case without data centre flexibility; a Mandated Flexibility scenario in which it is activated only during peak system stress periods; and an Open EU Flexibility “what-if” case, in which data centres mobilise their full flexibility potential to accommodate system needs.
The model focuses on Europe’s main data centre hubs – located around key cities in Germany, France, the Netherlands, Ireland and the United Kingdom – as well as emerging cases (in Italy, Poland, Spain, Switzerland, Denmark and Sweden) where data centre electricity demand in 2035 is projected to reach at least 10 terawatt hours (TWh) and/or 9 percent of national power demand. Across the 11 countries studied, the reduced need for thermal plants under the Mandated Flexibility scenario would result in cost savings worth 500 million euros annually. Under the Open EU Flexibility scenario, approximately 20 percent of data centre electricity demand would shift to times of abundant clean energy on a daily basis. This would avoid 20 TWh of fossil-based electricity generation annually and cut total costs for consumers by 1.7 billion euros per year, money saved primarily on gas purchases.
A comprehensive policy package to support the energy and digital transitions
To unlock the potential of data centre flexibility, the study outlines a set of recommendations, emphasising that policy measures need to be anchored in a coherent framework that aligns digital expansion with Europe’s energy and climate objectives. A no-regret option is to incentivise the location of new data centres in areas with high renewable energy resources and/or low grid constraint expectations. This can be enabled by including data centres and their flexibility potential in European, national and regional network planning alongside continued grid reinforcement and encouragement of system-friendly energy procurement strategies, such as locally sourced Power Purchase Agreements (PPAs).
The study also underlines the need for more harmonised frameworks for grid access. Promoting harmonised templates for Flexible Connection Agreements that are aligned with the varying flexibility potential of new grid connections including data centres, can enable faster access to congested grids in exchange for limited, clearly defined flexibility commitments. At the same time, they would address fragmented national practices and provide greater predictability for investors and system operators.
Various tools and policy options to increase system-level flexibility do exist and should be used more extensively, as they benefit all grid users, including data centres. These options encompass increasing the granularity of price zones to reflect inter-zonal congestion in wholesale price formation, introducing dynamic tariffs and time-of-use network charges, and providing incentives for smart heating or charging. Lastly, by prioritising renewable energy use and enforcing robust standards for energy and water efficiency and heat recovery, policymakers can strengthen the sustainability of data centre growth, authors conclude.
The 30-page study Value and Enablers of Data Centre Flexibility in Europe was written by Deloitte together with Agora Energiewende and is available for free download down below.
