Global trends in data centre regulation

With the surge in digitalisation driven by AI, cloud computing, and big data, data centres have become critical infrastructure underpinning economic growth and national strategy. Recent legal analysis has highlighted a complex and evolving regulatory landscape across several key jurisdictions including Spain, Germany, Italy, Vietnam, Indonesia, Thailand, and Australia. These jurisdictions illustrate both the diversity and convergence of legal challenges and market dynamics shaping the next phase of data centre expansion. This article considers key regulatory, environmental, planning and investment trends informing the legal profession’s approach to advising on data centre development and infrastructure.

Spain: Infrastructure Growth with Regulatory Gaps

Spain has witnessed remarkable growth in the development of data centres. Strategic geographic positioning, with submarine cable connections to the Americas, Africa, and the Middle East, positions Spain as a global digital gateway. The country boasts a high-quality fibre optic infrastructure, low land and energy costs relative to FLAP markets (Frankfurt, London, Amsterdam, Paris), and significant renewable energy penetration. The regional government of Aragón has emerged as a hyperscale data centre hotspot, attracting investments from Microsoft, Amazon, Blackstone, and Box2Bit totalling approximately €33 billion. Spain now hosts over 110 facilities above 0.5 MW, with installed capacity set to grow from 350 MW to 2,180 MW in five years.

However, regulation is still evolving. The central government has pledged to regulate data centres formally, but no draft legislation has been issued. The key challenge is grid access. A flood of demand-side connection applications has made capacity scarce and competitive. A new regulation mandates a €40/kW guarantee for grid access, but many requests are rejected due to system constraints and regulatory hurdles. Planned reforms seek to increase available capacity and improve transparency by obligating grid operators to publish capacity data. Still, data centres are unlikely to be prioritised in capacity tenders.

Environmental and Planning Considerations in Spain

Environmental permitting varies by region. Water usage is a major concern, requiring authorisation from the relevant basin authority. Urban planning relies on the land's zoning status, with industrial plots being preferred. Regional authorities have often declared data centres strategic investments, enabling faster permitting and, in some cases, land expropriation. On the real estate side, developers increasingly favour co-location models and liquidity strategies like sale-leasebacks. Energy efficiency metrics like Power Usage Effectiveness (PUE) are now central to leasing negotiations. Financing typically combines real estate or project finance principles, with a rising emphasis on sustainability-linked loans. Spain's core challenge remains connecting these assets to a limited grid while maintaining ESG compliance and affordability.

Germany: A Push for Zoning and Green Energy Alignment

Germany, already a digital infrastructure leader, is reinforcing its status through ambitious policy. The current federal coalition agreement aims to streamline permitting processes and strengthen the energy transition by supporting digital infrastructure, including data centres. Regulatory focus centres on zoning harmonisation, grid reliability, and ESG targets. Developers must coordinate closely with municipalities and transmission system operators, particularly given Germany's decentralised planning framework. Environmental compliance and access to green energy are pivotal to new developments.

Italy: Regulatory Momentum Amid Infrastructure Expansion

Italy is undergoing rapid transformation. Having overcome previous infrastructure gaps, the country now attracts substantial data centre investment. Between 2024 and 2028, Italy is projected to receive €7.8 billion in new development, with 20 major projects underway. Factors such as its central Mediterranean location, submarine cable infrastructure, and growing internal demand are driving exponential growth. Yet Italy lacks a formal regulatory framework for data centres, causing delays and friction between developers and authorities. To address this, the Ministry for Environment and Energy Security introduced guidelines in August 2024 for data centres with emergency generation capacity over 50 MW. These guidelines highlight brownfield development, water and energy efficiency, and the use of solar and geothermal power.

A proposed legislative bill seeks to categorise data centres distinctly from generic industrial facilities, with the aim of simplifying permitting and creating clear environmental and planning requirements. Local governments have recognised the potential for job creation and urban regeneration, with data centre investments supporting infrastructure improvements and skilled employment. Italy's success depends on regulatory streamlining and the consistent application of sustainability principles.

Vietnam: Growth Potential with Regulatory Complexities

Vietnam has emerged as a promising regional hub, driven by government digitalisation strategies and favourable costs. However, challenges persist. Foreign ownership restrictions require careful structuring via joint ventures, while strict cybersecurity and data localisation laws increase operational complexity. Power procurement remains immature, though improving. Developers are advised to seek industrial zone incentives and work with local partners to navigate opaque permitting environments. Vietnam's appeal lies in its growth trajectory, but regulatory clarity and energy integration will be key to scaling effectively.

Indonesia: Unlocking Capacity with Energy and Data Rules

Indonesia represents one of Southeast Asia's largest and most dynamic data centre markets. Its digital economy is booming, with data centre capacity demand expected to exceed 2 GW by 2030. Yet only 10% of the needed 'AI-ready' infrastructure currently exists. Regulatory classification of data centres as industrial facilities simplifies licensing, with operators typically required to base operations within industrial estates. The most common land title used is the Right to Build (HGB), offering up to 80 years of control.

Power remains a key challenge. The national utility PLN is the dominant electricity supplier, with growing interest in corporate renewable PPAs. However, grid infrastructure outside Java remains underdeveloped. Indonesia is exploring wheeling regulations that would allow direct procurement from renewable generators, but implementation remains uncertain. Local content requirements and an evolving data protection regime also pose compliance hurdles. Still, with support from sovereign funds and major investors like AWS, the market is advancing.

Thailand: Infrastructure Incentives and Regional Access

Thailand has emerged as a credible regional contender. Rapid cloud adoption, a favourable location, and high levels of internet penetration have created a thriving data market. The Board of Investment has approved nearly 50 projects worth over THB 700 billion, including multiple hyperscale facilities. Incentives include tax holidays, import duty exemptions, and liberalised land ownership rules. Strategic infrastructure is growing, especially within the Eastern Economic Corridor, supported by direct power purchase mechanisms and a Utility Green Tariff program.

Licensing in Thailand is governed by the telecom regulator, with data centres classed under telecommunications. Operators must also comply with the Personal Data Protection Act, modelled on GDPR. While infrastructure and policy are favourable, investors face uncertainties around foreign ownership rules post-incentive period and land rights continuity. Nonetheless, Thailand's renewable access, efficiency policies, and central ASEAN location position it strongly for continued growth.

Australia: Market Maturity and Legal Stability

Australia, a top-five global data centre market by capacity, offers a well-structured environment. With over 300 facilities and AUD 23 billion in sector value, the market is forecast to double by 2028. Sydney remains dominant, though growth is accelerating in Melbourne, Brisbane, and Perth. Electricity remains a concern, with data centres projected to consume 8% of national supply by 2030. The country is addressing this through clean energy mandates, new substation developments, and financial support via the Clean Energy Finance Corporation.

Regulatory clarity is high. Australia permits majority foreign ownership, subject to Foreign Investment Review Board thresholds. Data centres are classed as critical infrastructure, triggering enhanced national security scrutiny. Privacy is governed by the Privacy Act and Notifiable Data Breach Scheme, with class action risk increasingly relevant. Financing includes traditional real estate and project models, alongside green bonds and sustainability-linked loans. National and state governments provide significant tax incentives and grants to encourage infrastructure investment.

Conclusion: Legal Readiness for Digital Infrastructure Growth

Each of these jurisdictions illustrates distinct pathways to scaling data centre infrastructure. Spain, Italy and Germany are seeking to align policy and regulation with demand. Southeast Asian markets like Vietnam and Indonesia offer high growth with legal complexity. Thailand blends proactive incentives with strategic planning, while Australia stands out for regulatory maturity and investor confidence. The success of future projects will depend on balancing grid access, ESG compliance, urban integration, and clear regulatory frameworks.

As the international data centre sector expands, legal professionals will play a pivotal role in navigating land use planning, environmental compliance, energy structuring, digital security, and financing. The development of clearer statutory regimes and coordinated policies will be essential to support sustainable growth. The legal profession must remain attuned to both regional policy shifts and global regulatory trends to effectively support clients in this dynamic infrastructure domain.

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