Analysis: We anticipate that the size of the cloud computing French market will grow from USD21.1bn in 2024 to USD62.7bn in 2030, growing almost at a 20% CAGR between the two periods. As demand for data centres continues to outstrip supply, moratoria on new data centres are a key risk for the hyperscalers and the wider industry, especially those imposed in capital cities where cloud computing demand is highest. In January 2024, Ireland imposed a full ban on new data centre builds in Dublin in order to achieve its 2030 climate targets. This has severely impacted the ongoing investments and strategy of AWS.
To some extent we believe that similar regulatory action in the EU will be unlikely to immediately emerge as the bloc is looking to promote a regional-level regulation on energy efficiency. The EU’s Energy Efficiency Directive, which came into force in March 2024, proposes to identify those data centre firms that placing more stress on energy grids and where stress points will emerge. Consequently, we believe that from 2025 onwards any member state-level regulations may be potentially reshaped or overridden.
That said, the industry is greatly aware of the pressures coming from regulators towards energy efficiency and sustainability, so hyperscalers are looking to buy renewable energy via power purchase agreements (PPAs), which Microsoft did for the first time in France by acquiring 100MW of renewable energy. Other players with smaller financial and operational resources are competing fiercely to build or even relocate in strategic areas where renewable energy sources are abundant and there is a proximity to centres of economic activity to minimise latency. Consequently, we believe sustainability may become the strongest consolidation factor in the EU data centre market, especially as such strategic locations cannot host all the data centres planned and active in the region.