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Freshfields Transactions

| 2 minutes read

Sustainable data centres: Spain’s new rules

Spain announced the development of a new cybersecurity law and the implementation of regulations for sustainable data centres in early February.

Real estate investors have seen significant returns from the new asset class of sustainable data centres, which straddles two high-interest areas: digitalisation and sustainability. Some investors, perhaps stretching the truth, even see them as a new ‘Giffen good’ (meaning it defies standard economic and consumer demand theory and is not subject to the ups and downs of the economic cycle). 

The Spanish Minister for Digital Transformation and Public Administration, José Luis Escrivá has highlighted the high consumption of both electricity and water as negative features of (non-sustainable) data centres which, according to him, make specific regulations necessary.

Data centre climate neutrality challenges

The new regulations announced by the Minister should not come as a surprise. In September 2023 a new directive on energy efficiency was approved (to be transposed in 2025). The European Commission has already set ambitious goals such as the climate neutrality of data centres in the European Union by 2030. (The European Commission’s 2020 PDF has further details.) 

Nevertheless, many authoritative voices in the sector claim that, despite the great competitive advantage of the Spanish market, which offers cheaper energy than French and Italian neighbours (due to greater development of renewable energies), the government has lacked foresight. The Electricity Plan 2021-26, currently in force, envisaged a modest growth in energy demand, which has since proven unrealistic and inaccurate. If this Plan is already insufficient for existing data centres, we can imagine how far it may fall short when data centres forecast to be constructed over the next few years are taken into account. 

The Ministry for Digital Transformation and Public Administration has announced it is working on specific modifications to the Electricity Plan with a view to 2026 and is preparing a new Plan 2025-30. Most players consider this insufficient and are calling for swifter reactions from the authorities and Red Eléctrica (Red Eléctrica is the sole transmission agent and operator (TSO) of the Spanish electricity system). These critics will undoubtedly exert all possible pressure to ensure that data centre growth is not disrupted.

Sustainable data centres: legal issues

Lawyers are likewise intrigued by the new asset class of sustainable data centres. Developing specialised expertise is key. 

A sustainable data centre is not the typical “empty” warehouse where the tenant “puts things in”. Agreements need to be consistent with the data centres’ business and cover the concerns of all parties. 

Lawyers are no exception: we must be agile in moving with the times. International experience, tapping into the know-how already gained in other markets (such as the US) where this asset class has been developed before, is undoubtedly an advantage. And local knowledge remains fundamental in drafting tailored agreements that work, and that will not generate problems in the future.

We are very close to the data centres business, and we encourage you to reach out to the Freshfields team to discuss this asset class and the main challenges we see from the point of view of investment, taxfinancing or regulatory framework.