Europe Told to Cool Its Datacenter Boom Before Water and Power Run Short

Regulatory Action

The European Commission is expected to publish a Draft Regulation on Datacenter Water and Energy Efficiency (DR‑DWEE) by 31 October 2026, with the final text to enter into force on 1 January 2028. The draft follows the findings of Grundfos’ Scale and Secure: Powering Europe’s Digital Sovereignty report, which quantifies the projected rise of IT load from 10 GW today to 35 GW by 2030 and highlights the resulting water demand of up to 18,927 m³ per day for a single hyperscale facility.

What It Requires

Requirement	Detail	Compliance Deadline
Integrated Water‑Efficiency Planning	All new datacenter projects and major expansions must submit a Water‑Efficiency Impact Assessment (WEIA) as part of the national planning permit. The WEIA must model cooling water consumption, identify opportunities for closed‑loop or evaporative‑free cooling, and demonstrate a minimum 30 % reduction in water use versus the baseline defined in Annex II of the regulation.	1 January 2028 (for permits submitted after this date)
Energy‑Efficiency Design Standard	Facilities must adopt cooling technologies that limit electricity dedicated to cooling to ≤ 38 % of total facility power (the current EU average) and achieve an overall PUE ≤ 1.4 for new builds. Certification by an EU‑accredited body (e.g., EU‑Energy Star) is mandatory.	1 January 2028
Standardised Environmental Reporting	Operators must publish an annual Datacenter Sustainability Report (DSR) on the EU Open Data Portal. The DSR must include: total electricity consumption, water withdrawal, water reuse ratio, and heat‑to‑district‑heating recovery rate. Data must be submitted within 90 days of fiscal year‑end.	First submission due 31 March 2029
Incentive Eligibility Criteria	To qualify for EU‑wide tax credits (up to 15 % of capital expenditure) and green financing under the European Green Digital Fund, projects must: (a) meet the WEIA reduction target, (b) achieve the PUE threshold, and (c) include a documented heat‑reuse contract with a local district‑heating utility.	Align with permit approval dates
Public‑Interest Safeguard Clause	Local authorities may impose a Water‑Stress Threshold of 150 L per kW of IT load for regions classified as “high water stress” by the European Environment Agency. Projects exceeding this threshold must provide a mitigation plan or relocate to a lower‑stress zone.	Effective 1 January 2028

Compliance Timeline

1. By 31 October 2026 – Review the draft DR‑DWEE and begin internal impact assessments.
2. Q4 2026 – Q2 2027 – Engage with engineering teams to select low‑water cooling solutions (e.g., direct‑liquid cooling, adiabatic evaporative cooling with water recirculation).
3. 1 January 2028 – All planning applications must include a completed WEIA and energy‑efficiency design package.
4. By 31 March 2029 – Submit the first DSR for any facility that began operation after the regulation’s entry‑into‑force date.
5. Ongoing – Maintain eligibility for tax credits and green‑finance instruments by updating heat‑reuse contracts and reporting water‑reuse ratios annually.

Practical Steps for Operators

• Audit Existing Cooling Systems: Quantify current water draw and electricity use for cooling. Identify retrofits that can achieve the 30 % water‑use reduction target.
• Adopt Closed‑Loop Cooling: Deploy chillers that recirculate coolant, reducing fresh‑water intake to below 5 L kW⁻¹.
• Integrate with District Heating: Negotiate power‑purchase agreements that allow excess heat to flow into municipal heating networks. Use the EU’s Heat‑Recovery Facilitation Guide for contract templates.
• Prepare the WEIA: Use the EU‑provided modelling tool (available at the European Commission’s climate portal) to simulate water consumption under various cooling scenarios.
• Document for Incentives: Align project budgets with the European Green Digital Fund criteria, ensuring that all eligible expenditures are clearly tagged for audit.

Why This Matters

The draft regulation translates the report’s warning into enforceable obligations. By tying water‑efficiency directly to planning permission, the EU aims to prevent a repeat of the “coal‑plant‑sustained” datacenter growth seen in the United States. The combined effect of reduced water withdrawal, lower electricity demand for cooling, and heat‑reuse will keep the sector’s share of EU electricity consumption below the projected 9 % ceiling for 2030, while preserving water resources for households and agriculture.

Outlook

If the EU adopts the DR‑DWEE as drafted, Europe could become a reference model for sustainable digital infrastructure. Operators that embed water‑efficient design from the outset will benefit from streamlined approvals, tax incentives, and a stronger social licence to operate. Conversely, firms that ignore the upcoming requirements risk delayed permits, higher operating costs, and potential litigation from communities facing water scarcity.

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Prepared by the Compliance Office, European Data Infrastructure Unit