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Data Centres: An International Legal and Regulatory Perspective
Spotlight on Spain19 June 2025

In recent years, Spain has witnessed an impressive increase in the construction and development of data centres. This is largely due to the excellent conditions it offers for their establishment, which include, among others:
  • its strategic geographic location, which includes submarine cables that reach the Spanish coast and make it possible to connect to different continents (North and South America, Africa, the Middle East, etc.);
  • the quality of its fibre optic infrastructure, helping optimise hyperconnectivity and energy efficiency;
  • the high degree of renewables penetration, including solar and wind resources, which helps reduce the carbon footprint of such operations in alignment with EU regulations;
  • the availability of land, which is particularly important for the expansion of large-scale data centres;
  • low energy and land costs in comparison to major cities like those integrated into the ‘FLAP’ (Frankfurt, London, Amsterdam and Paris) market; and
  • the investments already made by major technology companies such as Amazon, Microsoft, Google and Oracle, which have reinforced Spain’s position in the international data centre landscape.

"Aragón in particular has become a hotspot for large technology companies to build hyperscale data centres given its strategic location."

Spain has more than 110 data centres exceeding 0.5 MW and 350+ MW installed capacity. If the current growth trend continues, this will reach 2,180 MW within the next five years according to Spain DC, the main Spanish data centre association.

Madrid, Barcelona and Aragón are the three locations that currently host the most operational facilities. Aragón in particular has become a hotspot for large technology companies to build hyperscale data centres given its strategic location, which ensures low latency and energy and water supply, as well as available land and governmental support. In recent months, Blackstone, Microsoft, Amazon and Box2Bit have announced investments in data centres totalling around €33bn in the region.

The expansion of data centres has been accompanied by comparable growth of the PPA market. Given electricity is one of the main costs for data centres, access to affordable energy is crucial. This is where PPAs play a key role. By engaging in long-term agreements with renewable energy providers, data centres can meet sustainability goals and become protected from market volatility, reducing energy costs.

Analysis

Unlike in other jurisdictions, data centres in Spain are not regulated as such. The Spanish central government has publicly announced its intention to regulate data centres’ activity. However, to date, there is not even a draft addressing such regulation.

Regulatory considerations

Access and connection to the grid     

One of the main bottlenecks in the development of data centres is access and connection to the grid, which has become scarce and very competitive.

At the end of 2023, a new regulation on demand access and connection was approved because of the significant increase of the access requests to connect new demand, such as data centres. Among other measures, demand access and connection permits now require the prior deposit of a €40/kW guarantee¹ to ensure the supply of a specific consumption within five years, with the formalisation of an economic access contract subject to certain requirements.

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"One of the main bottlenecks in the development of data centres is access and connection to the grid, which has become scarce and very competitive."

However, with grid demand applications skyrocketing, a significant number are still rejected because of the lack of capacity and regulatory limitations. Such limitations include the possibility of reserving transmission grid nodes for demand capacity tenders or the impossibility of connecting more than one consumer to the same point of the transmission grid without creating a private distribution grid.

New upcoming regulation is expected to increase available capacity (i.e. the technical specifications of demand capacity or the 2025-2030 new transmission grid planning) and promote transparency through the obligation of grid operators to publish their available capacity. In turn, it seems that data centres are not going to be the preferred option in the demand capacity tenders.

In the last year, we have seen an increasing number of renewable energy developers requesting demand access capacity for data centres under a self-consumption regime that includes a specific provision by which up to 50% of demand capacity may be requested from generation transmission grid nodes positions.

Environmental and urban planning

The environmental procedures to authorise construction of a data centre will depend on its type, needs and location. One of the most important considerations is access to water which requires granting a concession and authorisation for wastewater by the relevant water authority.

From an urban planning point of view, the specific procedure and authorisations depend on the regional and municipal regulations, with the preferred option being to use industrial land. It is recommended to check said status with the relevant town council beforehand.

Regional governments supporting these activities are declaring them as strategic investments for the region which can speed up the authorisation procedure and the implementation of the activity in specific areas and even the expropriation of land in certain cases.

Real estate considerations

Ownership and development

Historically, data centre operators (especially hyperscalers) have sought to acquire real estate to build and operate their facilities. The selected sites must (i) be large, flat plots of land (except for edge data centres located closer to their users); (ii) not be susceptible to flooding or seismic activity; (iii) not situated too close to strong electromagnetic sources such as airports and electric railroads; and (iv) with access to a stable and sustainable power supply, as well as water for cooling—ideally through closed-loop or alternative water systems to enhance sustainability. Increasingly, environmental regulations and energy consumption restrictions also influence site selection. Additionally, urban planning considerations in Spain require land to have an appropriate ‘zoning designation’, commonly general industrial use, or the processing of specific planning instruments.

Due to rising development costs, scarcity of suitable land and financial market pressures many operators are rethinking their existing strategies. Some are shifting towards co-location services, whilst others are leveraging liquidity-enhancing structures such as sale-leasebacks to finance expansion whilst maintaining operational control (such as Spanish insurance company Mafre who sold its Alcalá de Henares data centre in February 2024 whilst remaining as tenant).

Operation

Data centres may be built for an operator’s own data processing and storage needs or to provide third-party services. These range from co-location (leasing space for tenants’ servers) to hosting (leasing physical servers owned by the provider) and cloud computing (leasing virtual servers located in one or several data centres). In co-location models, the operator ensures infrastructure services, including power, cooling, security and connectivity, whilst tenants manage their hardware. In hosting and cloud computing, the provider also owns and maintains the hardware, as well as being in charge of cybersecurity.

Leasing models include wholesale leases, where tenants occupy entire buildings or substantial portions and retail co-location agreements, where smaller spaces or individual server racks are leased. Megawatts have replaced square footage as the primary leasing metric, with Power Usage Effectiveness (“PUE”) emerging as a key efficiency benchmark. Service level agreements (“SLAs”) are commonly signed as well to guarantee operational and maintenance standards.

Financing structures

Data centre financings vary based on the type of facility, customer mix and asset maturity. They typically follow real estate finance or project finance principles. Real estate finance emphasises the value of the underlying asset, often requiring a mortgage and ring-fencing the property from operations. Project finance, by contrast, relies on projected cash flows from the data centre’s operations.

"The rise of data centres in Spain poses a challenge in terms of sustainability, given the energy and water consumption they require."

Challenges and opportunities

Although well positioned to attract data centres, Spain faces important challenges, such as ensuring the development of robust energy grid infrastructures to fully realise their potential, as well as streamlining all administrative procedures before city councils and autonomous communities.

Training and retaining data centre industry specialists is also a major challenge for the sector, which needs to set strategies to attract talent by accounting for factors such as appropriate salary policies, continuous training, retention plans and flexible work.

Additionally, the rise of data centres in Spain poses a challenge in terms of sustainability, given the energy and water consumption they require.

In this regard, the Commission Delegated Regulation (EU) 2024/1364 of 14 March 2024 on the first phase of the establishment of a common union rating scheme for data centres, has already highlighted the increasing importance of energy consumption in the IT sector and the need for highly energy-efficient and sustainable data centres.

The main challenge for the development of the data centre sector in Spain is not associated with renewable energy production, but with access to the energy by the data centres and potential local grid constraints.

Finally, the abrupt growth of artificial intelligence also has a major impact on data centre development, which translates into a need to improve their design and management, adopt sustainable and efficient actions in response to the increase in energy consumption and implement security solutions.

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[1] Demand facilities connecting at a voltage less than 36 kV will be exempted from the deposit of this demand grid guarantee.

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