Morgan Stanley raises growth expectations for European data center capacity, with large tech companies set to be the main drivers

Morgan Stanley analyst Katy L. Huberty has raised her growth expectations for European data center capacity. Katy L. Huberty predicts that by 2035, European data center capacity will increase sixfold to 38 gigawatts, up from the previous expectation of a fivefold increase. In a report, the analyst stated that driving factors for this growth include: hyperscale enterprises (large tech companies building and managing data centers and cloud computing services), the construction of large data center campuses, increasing demand in secondary markets such as Spain, Milan, Zurich, and Scandinavia, as well as the steady and reliable projects in the UK and France. Additionally, the analyst estimates that by 2035, data centers may lead to an incremental power demand of around 270 terawatt-hours. Based on the decarbonization goals of large tech companies, approximately 100 gigawatts of new wind and solar projects may be needed by 2035, implying that capital expenditures for renewable energy developers will reach 115 billion euros by 2035. The analyst also projects that by 2030, data center power consumption will account for around 6% of Europe's total electricity demand, a proportion that will rise to over 8% by 2035