On-site insights: Private Equity in Data Centres Europe

*Panelist insights at IMN's Private Equity in Data Centres conference, London, November 10, 2025.*

1. Limited infrastructure threatens growth

Panelists remarked that the UK's grid infrastructure is unprepared for the AI boom, with power connection queues extending to 2034. Current capacity cannot meet the explosive demand growth from 25GW to 125GW in applications, creating a critical bottleneck for data center development.

2. Regulatory framework needs urgent reform

The current application system is "not realistic or sustainable" with too many speculative 100MW applications clogging the system. The regulatory framework requires more stringent rules and guidance to eliminate "zombie applications" that delay legitimate projects.

3. ESG becomes a competitive differentiator

GRESB is launching a data center benchmark next year, making ESG performance measurable and comparable. While "every data center claims sustainability," content-specific approaches and genuine environmental impact will separate leaders from followers.

4. Water scarcity presents both risk and opportunity

Water availability issues in the US and Southern Europe create significant operational risks, while innovative solutions like water reuse and desalination (particularly in Middle East markets) offer competitive advantages for forward-thinking operators.

5. Gas generation offers strategic hedge

Despite implementation challenges, gas generation provides portfolio diversification and positions operators to capitalize on the emerging hydrogen economy, particularly in markets like Germany where regulatory support is stronger.

6. AI workloads demand infrastructure revolution

Traditional air cooling is becoming obsolete for AI applications, requiring massive infrastructure upgrades. The shift to liquid cooling and higher power densities fundamentally changes data center design and operational requirements.

7. Skills gap threatens sector growth

The industry faces a critical shortage of qualified engineers, with minimum 5-year training periods required. Successful operators must invest heavily in apprenticeships and graduate schemes to build internal capability.

8. Digital sovereignty drives demand

With one-third of internet traffic now machine-to-machine, digital sovereignty concerns are accelerating demand for local data center capacity, creating opportunities for operators who can navigate regulatory complexities.

9. Heat reuse unlocks new revenue streams

Despite legal and technical complexities, heat reuse technologies present untapped revenue opportunities. Early movers who solve the regulatory and engineering challenges will gain significant competitive advantages.

10. Bold vision wins in uncertain markets

In an environment where "there's no confidence in anything anyone says," operators with the most ambitious applications and complete conviction in their strategies are securing the best opportunities and grid connections.

The sector is experiencing a fundamental shift where infrastructure constraints, regulatory challenges, and technological demands are creating both significant barriers to entry and substantial opportunities for well-capitalized, strategically-positioned operators.

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