Europe’s slow and steady approach to AI could be its edge

Europe, with its fragmented markets, is often said to be operating in the shadow of the U.S. and China when it comes to scaling AI.

But the very factors that challenge its growth as a major player may yet give it an edge when it comes to future-proofing the critical warehouses that power the AI boom.

The world is racing to double, if not triple, the entire data center capacity that has been built over the last forty years, Pankaj Sachdeva told CNBC, McKinsey senior partner in technology, with McKinsey estimating that build-out will cost up to $7 trillion by 2030. 

He expects the U.S. to account for the lion’s share of activity, but Europe will “continue to build at a pretty meaningful rate” to nearly double its existing capacity. 

“Europe is actually participating in this infrastructure build out, and is actually keeping pace, or we think that it will keep pace,” Sachdeva added.

To get there, the bloc must overcome major chokeholds in access to power and regulation, experts told CNBC.

In terms of grid congestion, Italy is one such country on the winning side. It has a connection time of up to three years compared with the European average of four years, according to energy think tank Ember.  

On the losing side is again Germany, the U.K., Ireland and the Netherlands, “where, basically either we just don’t have the grid capacity right now or we’ve got such a shortage in the system that there’s effectively a moratorium for the foreseeable future,” Jags Walia, head of global listed infrastructure at Van Lanschot Kempen told CNBC.

While differences between European countries are significant, it’s ultimately “going to be hard” to catch up on the U.S. in the short-term — where deregulation and huge investment are enabling a much quicker build-out — Walia said. Most European countries have around 200 to 300 data centers, he added, but “the U.S. has like 5,400.”  

Constraints are resulting in some a diversification away from the traditional FLAP-D markets of Frankfurt, London, Amsterdam, Paris, and Dublin, and driving investment in data centers where resources are plentiful and stable.

There have also been some efforts to develop projects faster. For example, in the U.K., there have been instances of central government overruling local government to approve data centers that were previously denied. Last year the…