The capital is there, and so is the demand. Nevertheless, Germany and Europe are lagging behind the USA and China when it comes to building data centers. There is a traffic jam at high-voltage connections that is likely to paralyze AI expansion for a decade.
When one of the largest individual investments to date in Mecklenburg-Western Pomerania was announced, there was hardly any mention of the most important reason for choosing the location: at the end of August, Prime Minister Manuela Schwesig and the head of the Schwarz Group, Gerd Chrzanowski, jointly announced the construction of one of the largest data centers in Germany in Dummerstorf, southeast of Rostock. The group behind Lidl and Kaufland wants to invest 5.6 billion euros in a server farm with an initial output of 240 megawatts in the community of 8,000 residents, which could grow to one gigawatt by 2045.
Why this commercial area at the motorway junction next to an Amazon logistics center was chosen was only mentioned in passing in the press release: "A connection to the 380 kilovolt high-voltage network is also possible at the proposed location." It wasn't data lines or proximity to customers that made the difference, but rather a power line. A 380-kilovolt line from the network operator 50Hertz runs through the community, which is currently being strengthened in order to transport wind power from the Baltic Sea.
Just 60 kilometers further east it was clear just a few weeks ago what a difference such a line makes. A state-of-the-art AI data center with 300 megawatts was also to be built on a field near Demmin: a billion euro investment, 1,250 jobs, energy for the district heating network. Demmin is also located in the middle of wind and solar parks. But exactly what Dummerstorf has is missing there: a connection option to the high-voltage network. The plan fell through.
The republic is in a technology jam
The two examples show that it is currently neither the availability of chips nor capital that determines the progress of Germany as an AI location, but rather the availability of electricity. The main reason why Germany and Europe are so far behind the USA and China in the global technology race is not a lack of demand or a lack of innovative strength. The narrowest bottleneck in AI expansion is the high-voltage power grid. Germany's electricity highways are so congested that the industry is likely to be stuck in traffic for at least the next ten years.
The AI industry is also booming in this country: According to the digital association Bitkom, the total German IT connection capacity is expected to triple from today's 3.3 gigawatts to around 9.7 gigawatts by 2035. More than half of the computing power will then go to AI and high-performance computing (HPC). But by then it will be 90 gigawatts in China and even 160 gigawatts in the USA. The most important reason for the comparatively slow pace is the power grids: "The availability of sufficient power connection services is currently seen as by far the biggest challenge for the expansion of data centers in Germany," says the association, citing a survey among operators and industry experts. "91 percent of those surveyed cited access to electricity and network capacity as one of the three biggest challenges."
Across Germany, not only developers of data centers, but especially those of battery storage systems, electrolyzers and other large consumers are jostling for the few remaining free accesses. The four transmission system operators (TSOs) 50Hertz, Tennet, Amprion and TransnetBW are responsible for the connections to the high-voltage network. They are so overwhelmed with applications for new network connections that they were forced to rush forward with a controversial procedure in April: According to this, whoever applied for it first will no longer have access. Instead, connection requests are evaluated according to a points system, according to criteria that the network operators themselves have set.
Disadvantage for little ones
In the future, it will be assessed whether the necessary areas have already been purchased, routes are secured, purchase contracts for the necessary technology are in place and the respective project relieves the strain on the network. This is intended to ensure a “meritocratic prioritization” of applications. If you don't collect enough points, you're out of luck. This so-called maturity process “could potentially disadvantage smaller players or more complex projects,” say Amprion & Co.
However, there is no other way to cope with the flood of applications. It is said that “almost all free network connection points on the transmission network have already been reserved for the next five years.” Applications that have already been submitted would “fully utilize the available network connections well into the 2030s.” More than 700 such applications with a total volume of 270 gigawatts had already been submitted at the end of 2025, three quarters of them for battery storage, more than any network development plan had planned. The previous regulations were only designed for a few cases per year and were not designed for hundreds of cases.
The lines are so hotly contested that "secondary markets for network connection reservations" have formed, "on which capacities are traded or strategically withheld by connection recipients," according to a joint document from the network operators. There is a risk of “the displacement of projects with great importance for decarbonization and industrial transformation,” such as data centers, chip factories or electrolyzers. And the crowd remains large: In the first application cycle, despite fees and deposits, 347 applications were received with a total volume of 156 gigawatts, many times what can be connected.
The network congestion will block German AI expansion for a decade
Many important AI projects are now in a queue that will hardly change in the coming decade: "In the first cycle, a significant part of the capacity available in the next ten years or so is likely to be allocated," writes the business law firm Gleiss Lutz in an analysis. In later rounds, “only newly created or freed-up capacity would probably be available.” The course is now being set. Anyone who doesn't get a chance will likely be left empty-handed for the next ten years.
In the Tennet control area, for example, the next connections to substations will not be available until 2030 at the earliest, and for TransnetBW and Amprion only from 2032, and only "probably" or according to a "non-binding initial assessment". Things are hardly better in other parts of Europe than in Germany: According to real estate consultancy Jones Lang LaSalle, the average waiting times for connecting new data centers are between seven years in Paris, Frankfurt and London and ten years in Amsterdam. In Dublin, the electricity network is so overloaded that no new applications will be allowed to be submitted until 2028.
The federal government also admits the problem: In its data center strategy, it speaks of a “backlog of applications,” but at the same time wants to quadruple AI computing power by 2030. It wants to give the transmission system operators' maturity process a legal framework with a network package. But that's stuck. The vote in the Bundestag that was actually planned for this week has just been postponed again, probably until December.
The reason is a dispute over wind and solar parks: Economics Minister Katherina Reiche wants new systems in overloaded grid areas to be partially regulated without compensation. The industry, on the other hand, is up in arms. This means that the rules for data centers are also up in the air. The network operators believe that a fundamental political decision is necessary anyway: in the medium term, there is no way around fixed quotas for individual technologies, such as data centers or battery storage.
And even those who have secured approval for a connection have to wait. The Schwarz Group was lucky: According to media reports, the network operator 50Hertz confirmed the connection of its data center a few months before the maturity process was introduced. But it will still take some time until the first server is up and running: construction is scheduled to begin at the end of 2027 or beginning of 2028, and operations will not begin until 2032. According to the company, the start of construction depends largely on when the necessary power infrastructure is in place.
