Data center stagnation threatens to cost Dutch economy billions

According to a report by ING, the stagnation in the growth of data centers could cost the Netherlands billions of euros and undermine the country's competitiveness. Without expansion, there is a risk that companies in AI, fintech, and cloud computing will seek accommodation elsewhere, resulting in a loss of investment, jobs, and technological knowledge. Amsterdam also risks losing its position as a major data center hub in Europe. The problems primarily stem from spatial and energy-related constraints, with permits, grid capacity, and local objections hindering expansion.

The current restrictions on data center expansion in the Netherlands have potentially far-reaching economic consequences. ING warns, according to De Telegraaf, that a de facto halt to new data centers could cost the Netherlands billions of euros and undermine the country's competitiveness. Without sufficient capacity, AI companies, fintech companies, and cloud providers are threatening to relocate their activities abroad, resulting in a loss of investment, jobs, and technological expertise. Amsterdam, once an important European hub for data traffic, risks losing its position as a data center hub. This development is exacerbated by the fact that demand for data center services is greater than ever, driven by digitization, automation, and rapid developments in AI. The main challenge is a shortage of capacity on the electricity grid, which means that no new connections will be possible in North Holland (among other places) in the coming years, posing a threat to the Dutch and European economies.

The impact on digital sovereignty

In addition to the economic damage, the data center freeze is at odds with the desire to increase Europe's digital sovereignty. Europe is currently heavily dependent on American cloud services; 70-80% of the European cloud market is controlled by American tech giants such as Amazon, Microsoft, and Google. Digital sovereignty implies that Europe must gain more control over its own data and digital infrastructure in order to comply with its own legal and ethical standards. EuroStack, a European initiative for digital autonomy, can help with this. However, the limited expansion possibilities for data centers in the Netherlands make it more difficult to develop and host European alternatives, thereby perpetuating dependence on American parties. The potential consequences extend beyond financial damage: delayed innovation, higher latency for digital services, and reduced data sovereignty for European customers.

Causes and possible solutions

The underlying problems for the data center bottleneck are mainly spatial and energy-related. New data centers require a significant amount of power, physical space, and fast connections, while permits, grid capacity, and local objections make expansion challenging. Stijn Grove, director of the Dutch Data Center Association, argues that outdated thinking about infrastructure has led to the current bottleneck. He advocates an integrated approach in which spatial planning, economic planning, and energy policy are better aligned to leverage smart solutions and free up additional network capacity. ING also advocates for more national coordination and smart integration of new data centers, for example, near offshore wind farms, where residual heat can be used for district heating. A flexible and dynamic infrastructure is required, where control can be partially transferred in certain situations, allowing users to be switched on or off based on priority.

Innovation and sustainability

On the one hand, the data center sector is responsible for ever-increasing energy consumption, but at the same time, it is innovative in the field of energy efficiency and the use of sustainable electricity. Data centers are increasingly being located near each other to utilize their infrastructure more efficiently, as well as near companies and institutions that can utilize residual heat, thereby saving energy and reducing CO2 emissions. Michiel Panders, General Manager Europe at R&M, notes that many solutions are already available and significant investments have been made; however, this sometimes hinders the accelerated replacement of existing technologies. He wonders where the real environmental benefit can be achieved most: in the source of the energy used, more efficient reuse of energy, or innovations in more efficient chips. By improving these aspects, the environmental impact could potentially be reduced more effectively and sustainably. The sector is facing a challenging phase with many changes, which offer opportunities but require new ways of thinking, collaborating, and acting.