Europe’s battle for power leads to evolution of new power ecosystem

The boom in artificial intelligence, a pressing need for more data centers and the energy transition story — particularly in transportation — are all spurring demand for electricity, and the existing power infrastructure is struggling to keep up.

Businesses are facing five to eight-year wait times to connect to Europe’s ageing and strained electricity grids, experts told CNBC, as the emergence of new areas of demand drives an unprecedented rise in permit requests for power. According to the IEA, at least 1,500 gigawatts of global clean energy projects have been stopped or delayed because of a lack of grid connections and about $700 billion of grid investment is needed for countries to meet their green goals.

Data centers, the large facilities that house servers for computing processes and often require huge amounts of power, are the “primary director” of that growing competition to connect to the grid, said Diego Hernandez Diaz, partner at McKinsey.

He told CNBC that clients have quoted wait times of up to eight years to connect to the grid.

“There are certain transmission system operators in Europe, that are already facing two, three or more folks all attempting to interconnect to the same node at the same time. … There is a literal queue within individual connection points to see who gets to connect first,” he explained.

Hernandez, whose work focuses on electro-intensive industries, said that over the last 18 months, nearly all of his work has focused on data centers, a sector that he expects to grow at an annual compound growth rate of 20% over the next six years. Demand for the facilities required to train large language models (LLMs) is expected to continue its exponential increase as tech giants race to dominate in AI.

Energy management firm Schneider Electric warned in a January report that Europe faces a looming power crunch, with three to five-year waiting lists for grid connections in energy-constrained regions.

“It’s kind of a race,” Steven Carlini, chief advocate of AI and data centers at Schneider Electric, told CNBC. “You have all these companies that are trying to deploy as much capacity as they can. But it’s constrained by the number of GPUs [graphics processing units] and the available power and the permitting.”

“We’re going from a situation where you have one application or two applications [to connect to the grid] per year, in some countries, to 1,000,” Carlini said.

It’s not just the amount of investment needed — but also the speed with which it can be deployed —…