Iberdrola, Echelon Form JV to Develop Data Centers in Spain
(Bloomberg) -- Spanish power giant Iberdrola SA is forming a joint venture with Echelon Data Centres to build and operate data centers in Spain, gaining a foothold in the capital-intensive and energy-hungry sector in its home market.
Echelon — backed by US private equity firm Starwood Capital Group LLC — will own 80% of the new company, while Iberdrola’s CPD4Green unit will hold the rest, according to an emailed statement Monday. Iberdrola will guarantee a constant supply of electricity to the new facilities and pinpoint land already connected to the power grid where centers can be built. The statement confirmed an earlier Bloomberg report.
The first project — a more than 160,000 square-meter (1.72 million square-foot) site dubbed Madrid Sur near the Spanish capital — is expected to start operations before 2030. It will deliver 144 megawatts of data processing capacity, backed by a 230-megawatt power connection that’s already been secured. Iberdrola will erect an on-site photovoltaic plant that will go toward supplying a total of one terawatt-hour of renewable energy to the facility. No financial terms were disclosed.
The rapid expansion of artificial intelligence is driving a surge in demand for computational power and electricity, spurring developers to aggressively scale up infrastructure. BloombergNEF projects that data centers will consume almost 1,600 terawatt-hours of electricity a year by 2035 — equivalent to 4.4% of global power demand. If they were a country, that would make them the fourth-largest energy consumer worldwide behind China, the US and India in the 2030s.
While fossil fuels are expected to generate the bulk of the additional power over the next five years, other technologies such as nuclear may see a resurgence in certain markets. Longer term, renewable energy is expected to dominate, providing more than half of the new generation capacity by the middle of the next decade. This shift will be propelled in large part by major technology companies like Microsoft Corp. and Meta Platforms Inc., which are pursuing ambitious clean energy goals.
The availability of land, renewable energy and strong connectivity has made Spain a magnet for technology companies and investment funds looking to expand data center capacity. Demand for data centers in the country is expected to almost double by 2028, according to lobby group SpainDC.
Iberdrola currently supplies more than 11 terawatt-hours to data center companies and operators globally.
(Updates second paragraph with attribution to a company statement, confirming an earlier Bloomberg report.)
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