Polish Polish in Krakow Poles can see the grid, which is the Polish government electricity cup, which is expected to rise again on inflation – January 18, 1025. Poland has one of the highest inflation in Europe. (Photo by Dominika Zarzycka/Nurphoto via Getty Images
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The boom of AI, the urgent need for more data centers, and the energy transition story (especially in transportation) have inspired demand for electricity, and existing power infrastructure is working to keep up.
Experts told CNBC that businesses are facing five to eight years of waiting time to connect to Europe’s aging and power grid, as the emergence of new areas of demand drives unprecedented growth in license requests. According to the IEA, At least 1,500 GW Global clean energy projects have been stopped or postponed due to lack of grid connections and require approximately $700 billion in grid investment to achieve its green goals.
Data centers, large facilities that house servers for computing processes, often require a large number of strengthMcKinsey partner Diego Hernandez Diaz said it was an increasingly competitive “primary director” in the competition with the grid connection.
He told CNBC that customers cite waiting time up to eight years to connect to the grid.
He explained: “There are some transport system operators in Europe that have faced two, three or more people, all of whom are trying to interconnect to the same node at the same time. … There is a literal queue within a single connection point to see who connects first.”
Hernandez, whose work focuses on electricity-intensive industries, said that over the past 18 months, he has focused almost all his work on data centers and he expects to grow at a CAGR of 20% per year over the next six years. The demand for facilities required to train large language models (LLMs) is expected to continue Exponential increase With the competition for tech giants dominating AI.
Energy Management Company Schneider Electric The January report warned that Europe faced an imminent force tightening, with a waiting list of three to five years in grid connections in energy-constrained areas.
We have one or two applications to 1,000 applications per year from certain countries.
Steven Carlini
Lead advocate for AI and data centers
“It’s a race,” Steven Carlini, chief advocate of AI and Schneider Electric’s data center, told CNBC. “You have companies that all these companies try to deploy as much capability as possible. However, it’s bounded by the number of GPUs (graphics processing units) and the power and licenses available.”
“We have one or two applications from some countries (connected to the grid) to 1,000 applications,” Kalini said.
McKinsey’s Diaz said it’s not only the amount of investment required, but the speed at which it is deployed — and that will be the key to solving the problem. He also pointed out that high-voltage grid operators are increasingly working, with the German example requiring construction from 400 kilometers of power lines to 2,000 kilometers per year.
Diaz sees competition to connect to the grid in 2025 to “maintain or intensify”.
Jerome Fournier, innovation director at Nexans, a submarine cable maker, said his company has a “huge” order backlog ($7.28 billion to $104 billion) in the range of €7 to 1 billion. Nexans’ cables are used to transport electricity generated by wind and solar farms and provide electricity to homes and businesses.
“Everyone is thinking: Is there still some room in our plan to build other projects?” he said.
Fournier told CNBC that companies like Nexans should also keep slot machines for smaller projects, such as the interconnection of offshore wind turbines. “You have to maintain a proper balance between the burden of the plan, profitability and this electrification,” he said.
A new power supply ecosystem
According to Schneider Electric’s Carlini, power constraints are leading data center operators to develop their own “power backup ecosystem.”
In the future, data centers are expected to be the center of this grid ecosystem, especially if they can pass Small modular reactor – Mini nuclear reactors that generate electricity.
Battery storage Strategic charging is also becoming increasingly important, Calini said. These systems allow temporary storage of energy from the grid to provide additional backups.
Ben Pritchard, CEO of Power Solutions provider AVK, said some European countries are facing a large number of 100 MW grid connection requests at scale they have never seen before.
He advocates transitional connectivity energy solutions, such as using microgrids, which are a separate island power system.
In Norway, they are being tried Flexible connection protocol If customers restrict their connection to the grid based on certain conditions, stresses Beatrice Petrovich, senior energy and climate analyst at think tank Ember. This allows them to adjust their energy usage based on how the grid performs at certain times.
Ember also calls for the implementation of its so-called rules “Expected” grid investment. Petrovic explained that these will allow grid operators to plan in a forward-looking way to take into account market trends in key technologies such as growth in renewable energy and battery storage.
Avk’s Pritchard said that countries that improve legislation that enables companies to have a completely decarbonized energy stack will be “winners of the game” and propose a more “friendly ecosystem” around the data center.
Ultimately, the bottleneck in the grid “encourages people to think differently, and when people are encouraged to think differently, they are more open to different solutions. I think that is bringing a big shift in the market,” Pritchard said.
Moderate EU growth
Despite the increasing demand for electricity in some new and developing industries, Europe still lags behind the rest of the world in terms of electricity demand growth. High electricity prices and operating costs are hindering overall demand in the region, resulting in a more fragmented market.
This month, the International Energy Agency (IEA) praised the rise of the “new era” as it boosted forecasts for global demand, forecasting a 3.9% growth in 2025-2027, the fastest growing rate in recent years.
However, the predictions about Europe are more modest. According to a January report from Energy Think Tank Ember, the region has grown by just 1% after two years of sharp decline in electricity demand.
“In 2024, this marks a turning point in electricity demand,” said Ember, one of their report authors. “What we’re seeing is the first rebound – even after years of decline, it’s a small rebound – it’s common throughout the obstacles.”
McKinsey’s Diaz explained that electricity prices have settled between 60 and 80 euros per megawatt since the energy crisis triggered by Russia’s invasion of Ukraine and subsequent sanctions. However, this is still 50-100% higher than the price in the past two decades.
As a result, consumer costs surged, leading to signs of slowing demand for heat pumps and electric vehicles, he said.
Diaz added that for European manufacturers, energy demand is “higher than towers at any other geographical location in the world, and it may not only be more expensive, but it may be more challenging,” said Hernandez.
Hernandez said the “unprecedented” growth in data centers is “to help the overall curve so slight, but everything else is fighting against it.”
