Denmark faces data center reckoning amid power grid strains

COPENHAGEN, Denmark — The Nordics, long seen as a magnet for data center investment thanks to their stable climate and abundance of renewable energy, are now weighing limits on the growth of the power-hungry facilities as surging energy demand forces a rethink.

At the center of the debate is Denmark, the first of the Nordics to confront the question head-on, as the formation of a new government and a spike in grid access requests have meant a pause on new projects.

Data centers around the world are increasingly facing pushback due to concerns about their energy use. In the U.S, Maine recently came close to a data center construction ban and in Pennsylvania, the backlash could harm incumbents ahead of elections. Other states, including Virginia and Oklahoma are considering moratoriums.

Only two European countries have enforced full moratoriums on data centers, namely the Netherlands and Ireland. Both member states have since eased restrictions under certain conditions. But grid pressures are spreading across the continent, as the AI boom adds to an acceleration in electrification that was already being boosted by the energy transition and digitalization.

In March, Denmark’s state-owned grid operator Energinet introduced a temporary pause on new grid connection agreements due to an “explosion” in capacity requests, a spokesperson told CNBC. Around 60 GW of projects are waiting for connections. That far exceeds Denmark’s peak electricity demand of around 7 GW. Data centers account for nearly a quarter (14 GW) of the 60 GW potential new grid connection projects, the spokesperson said.

An extension of the moratorium can’t be ruled out, Data Center Industry Association (DDI) CEO Henrik Hansen, told CNBC.

“We have to be realistic and look at what is actually available. It’s not possible to really just go berserk with all kinds of connection agreements, because the power is not available. We have to lean into this discussion and maybe also discipline our own industry a bit more.”

He added that the spike in applications has resulted in a “fantasy” queue, where the gap between what’s available and what’s been requested is growing. The industry therefore, needs to take a closer look at projects that might not be as viable, he said, adding that the association is calling for more criteria to determine who should be given the highest priority and fastest connections.

“We argue very much for the need to clean up that queue and look into stronger criteria in terms of maturity, actual investment decisions, customers and also the societal value,” Hansen said. For some countries like the Netherlands, choosing between who should get access has been reduced to a debate about what’s more important: a data center or a hospital.

Sebastian Schwartz…