Data center site selection for Spain

Data Centre Site selection for Spain

Projections suggest the global data centre sector’s capacity will double by 2030, requiring up to $3 trillion in combined real estate and IT capital expenditure.[¹] This growth, fuelled by cloud adoption and the immense power demands of artificial intelligence, has fundamentally transformed the decision-making process for developers. The importance of site selection has never been greater, as securing a location is now a complex strategic exercise where access to power outweighs almost every other consideration.

Why site selection matters

The process of choosing a location for a new data centre has evolved from a technical checklist into a critical business strategy. Historically, site selection for data centers prioritised land availability, robust fibre connectivity, and logistical access. Today, these factors are merely the baseline. The modern challenge lies in navigating a landscape of constrained power, complex regulations, and increasing public scrutiny, making the importance of site selection a primary determinant of a project’s success or failure.

Power availability has become the most important consideration. In many established European markets, the wait time for a new grid connection can extend for several years, a timeline that is incompatible with the rapid pace of digital demand.[¹] This scarcity forces developers to think in parallel, advancing design and permitting long before a power commitment is secured. As a result, the search for suitable sites has expanded beyond traditional hubs, creating opportunities in emerging secondary markets.

Within the EU, this shift is creating new centres of gravity for digital infrastructure. Spain, for instance, is rapidly emerging as a strategic location. With 65 data centres, it rivals established markets like the Netherlands and is attracting significant investment. Cities such as Madrid are becoming key secondary hubs, benefiting from an emerging power landscape and a proactive approach to attracting digital investment. This trend highlights how location selection for data centres is no longer confined to the Frankfurt, London, Amsterdam, Paris, and Dublin (FLAP-D) markets, but is now a pan-European strategic consideration.

Common challenges and pitfalls

Navigating the path to a successful data centre deployment involves overcoming a series of significant obstacles. The most pressing of these is securing access to clean, reliable power. Over three-quarters of European operators identify power access as their primary challenge over the next three years, a constraint that dictates project timelines and viability.[²] In many primary markets, grids are at capacity, forcing developers into long queues or compelling them to fund their own energy generation infrastructure.[¹]

Land availability and cost present another major hurdle. In mature European hubs, suitable parcels of land with the necessary zoning and utility access are increasingly scarce and expensive. This has driven a trend toward larger, campus-style developments further from urban cores, where operators can acquire hundreds of acres to secure a pipeline for future, phased expansion. This strategy, however, introduces new complexities related to connectivity and workforce access.

Beyond physical constraints, developers face a growing web of regulatory and social challenges. Permitting processes are becoming more stringent, with many established markets introducing stricter sustainability standards, noise pollution limits, and mandatory heat reuse policies.[²] Compounding this is a community ‘acceptance paradox’: while public support for digital infrastructure is high at a national level (93%), local support for specific projects can be as low as 35%.[¹] This gap underscores the need to treat community engagement and regulatory alignment not as afterthoughts, but as core components of the site selection process itself.

Key considerations for site selection

A successful site selection strategy integrates operational, infrastructural, and social considerations from the outset. The decision must be grounded in a comprehensive understanding of the facility’s total cost of ownership (TCO), a framework that evaluates expenses over the entire lifecycle, from acquisition to decommissioning.[³] This ensures the chosen site aligns with long-term financial and business objectives, safeguarding against unforeseen costs and operational downtime.

The infrastructure needs of a modern data centre are dictated also by the demands of high-density computing. While power, cooling, and space remain fundamental, the rise of AI has redefined the requirements for each. Rack densities are increasing from a traditional 7-10 kW to over 250 kW, necessitating designs that can accommodate advanced liquid cooling and a much higher power demand per square metre. Facilities must be designed for the future, with the flexibility to adapt to technologies that may not yet be mainstream.

Simultaneously, the environmental and social impact of a data centre has become a critical factor for securing a “licence to operate.” Regulators across the EU increasingly link grid access to demonstrable environmental performance. This means that factors like heat recovery, water stewardship, and renewable energy sourcing are no longer differentiators but prerequisites for project approval. Proactive engagement with local communities to deliver tangible benefits, such as providing waste heat to district heating networks, is essential for building the trust needed for long-term success.

Technical Requirements

The technical viability of a potential data centre site hinges on a robust and resilient infrastructure foundation. A reliable power source is non-negotiable. This extends beyond a simple grid connection to encompass redundancy and backup solutions. Given the multi-year delays for new grid connections, operators are increasingly implementing behind-the-meter power generation, often using natural gas as a bridge fuel, and integrating UPS and Battery Energy Storage Systems (BESS) to manage load spikes and provide short-term backup.[¹]

Network connectivity is equally critical. The site must offer high-capacity, low-latency fibre links from multiple carriers to ensure redundancy and competitive pricing. For latency-sensitive applications like AI inference and cloud services, proximity to major internet exchange points and key user populations is vital for performance. The quality of connectivity directly impacts the services a data centre can offer and the customers it can attract.

Security, both physical and digital, is a paramount concern. The site itself must be assessed for physical risks, with considerations for access control, surveillance, and perimeter security. The geopolitical landscape of the chosen region also plays a role, as political stability directly influences risks related to data security and sovereignty. A comprehensive risk assessment must account for these interconnected factors to ensure the facility can protect its critical digital assets.

Risk assessment and management

A thorough risk assessment is fundamental to a sound site selection strategy, ensuring long-term operational resilience. This process begins with an evaluation of environmental and geographical hazards. Before acquisition, detailed engineering studies should analyse a site’s exposure to natural disasters such as flooding and seismic activity. For example, building on a 100-year floodplain introduces a 1% chance of flooding in any given year, a risk that must be mitigated through design or avoided entirely.

Political and regulatory stability is another crucial dimension of risk. A stable political environment ensures consistent policy, reliable utility services, and a predictable investment climate. Developers must navigate a complex web of regulations, from national data sovereignty laws to local zoning ordinances and EU-wide directives like the Energy Efficiency Directive (EED). Emerging markets like Spain, with strong economic indicators such as a positive manufacturing PMI, signal a stable and growing environment that is attractive for long-term digital infrastructure investments.

Finally, long-term environmental risks, particularly water scarcity, must be carefully managed. Data centres can be significant water consumers, primarily for cooling. In water-stressed regions, this can create operational risks and community opposition. Operators are increasingly exploring alternatives to potable water, such as recycled greywater or captured rainwater, to minimise their environmental impact, improve Water Usage Effectiveness (WUE) and ensure sustainable operations.[²] Another mitigating measure that is seeing adoption in the market is implementation of (adiabatic) Air Cooled Chillers that reduce reliance on water for cooling, greatly improving WUE.

Business Alignment and Strategic Planning

Effective data centre site selection is not merely a technical task; it is a strategic business decision that must align with overarching corporate objectives. The choice of location can dictate a company’s ability to enter new markets, support the development of emerging technologies like AI, or meet data sovereignty requirements for its clients. As such, the decision-making process must involve executive stakeholders from finance, operations, and strategy, ensuring the final choice supports the company’s long-term vision.

The financial implications of site selection are immense. The sector is in the midst of a capital-intensive supercycle, with total investment in new facilities and IT equipment projected to reach up to $3 trillion by 2030.[¹] Financial modelling must account for a wide range of variables, including land acquisition, construction costs that vary significantly by market, long-term energy prices, and local taxes. A comprehensive model provides the clarity needed to assess the financial viability and potential return on investment for each potential site.

Stakeholder engagement is a critical component of strategic planning that directly impacts project timelines and costs. Proactively engaging with local communities, utility providers, and regulatory bodies can transform potential opposition into collaborative partnerships. By co-creating solutions that provide local benefits, such as job creation or heat reuse, developers can de-risk the entitlement process and build the social licence required for a successful, long-term presence in the community.[¹]

Future scalability and Sustainability

Site selection must be a forward-looking process, anticipating the technological and environmental demands of the future. Planning for scalability is essential. The trend is toward large, campus-style developments that can be built out in phases, allowing operators to scale capacity in line with demand. The adoption of prefabricated and modular data centre systems is accelerating this trend, enabling faster deployment and greater flexibility to adapt to evolving hardware requirements.[¹]

Sustainability is no longer an option but a core design driver. The European data centre market is a leader in this area, with an estimated 94% of its energy sourced from renewables.[²] This commitment is increasingly formalised through Power Purchase Agreements (PPAs) and investments in on-site generation. The goal is to create a carbon-neutral footprint, a target that influences every aspect of facility design and operation.

Innovations in data centre design are crucial for achieving both scalability and sustainability. Facilities must be designed to accommodate future technologies, even if they are not yet deployed. This includes planning for higher rack densities and the infrastructure for advanced liquid cooling, which is up to 80% more efficient than traditional air cooling.[⁴] By building in this flexibility from day one, operators can ensure their assets remain competitive and compliant for decades to come, providing a resilient foundation for the digital economy.

Financial Aspects

The immense capital required for data centre development has led to an evolution in financing practices. The market is characterised by a significant influx of institutional capital, with platform acquisitions, joint ventures, and mergers and acquisitions becoming common strategies for scaling operations. To diversify liquidity beyond traditional bank debt, sophisticated financing structures such as Asset-Backed Securities (ABS) and Commercial Mortgage-Backed Securities (CMBS) are emerging as critical channels for funding growth.[¹]

Within the European Union, governmental grants and subsidies can play a role in the financial viability of a project. However, these incentives are increasingly tied to specific policy objectives, particularly sustainability. Financial support is often contingent on commitments to use renewable energy, meet stringent efficiency standards, or implement innovative solutions like heat reuse. This aligns public investment with the goal of fostering a green digital economy. Beyond government grants, private investors are also driving sustainability as an important aspect of data centre design.

The financial case for data centres remains compelling, driven by strong market fundamentals. Global occupancy rates stand at 97%, and with power constraints limiting new supply, lease rates are expected to see sustained growth.[¹] This creates a favourable environment for private investment. To manage the significant upfront costs and operational risks, risk-sharing models and strategic partnerships are becoming prevalent. Collaborations between data centre developers and energy companies, for example, can unlock access to power and create more resilient and cost-effective energy solutions.

How Deerns can help

Navigating the complexities of modern data centre site selection requires a partner with deep expertise in both engineering and strategic planning. Deerns provides comprehensive data centre consulting services to guide clients through every stage of the process, from initial feasibility studies and site evaluation to final design and commissioning. Our approach aligns power, permits, and future-proof design long before construction begins, ensuring projects are viable, resilient, and ready for what’s next.

Our international teams bring decades of experience in technical consulting, MEP design, and sustainability alignment. We treat policy and regulatory requirements as engineering challenges, finding practical solutions that meet environmental targets while preserving operational flexibility. By bridging the gap between high-level business objectives and the technical realities of infrastructure development, we help our clients make informed decisions that deliver long-term value. Deerns is your partner in building the successful data centres that power the digital future.

Sources

[¹] JLL, “2026 Global Data Center Outlook”
[²] Data Center Knowledge, “European Data Center Investment to Top €100B by 2030 – Report”
[³] JLL, “Optimising your data centre TCO strategy”
[⁴] Schneider Electric, “Revolutionizing Data Centers for a More Sustainable Future,” European Outlook 2025