The EU could face a 19GW gap between demand for data centre capacity and installed supply by 2036. 

That’s according to European Central Bank President Christine Lagarde, who has warned that Europe needs to build infrastructure at a much faster pace – especially if it’s going to keep up with the likes of the United States and China. 

The figure comes from the European Commission’s impact assessment for the proposed Cloud and AI Development Act. Under its central baseline scenario, EU data centre demand reaches around 61.5GW of IT load by 2036, while installed capacity reaches around 42.5GW.

That would leave a 19GW shortfall if existing policies and market trends continued without additional intervention. The Commission also found a deficit under its alternative scenarios, ranging from 12GW in the low-growth case to 23GW under its high-growth assumptions.

Lagarde used the figures during a speech in Vienna to argue that Europe’s push for greater technological sovereignty ultimately depends on substantially expanding its physical AI infrastructure.

She noted that the US currently plays host to around three-quarters of global AI computing capacity, while Europe sits at roughly 5%. Given the fact that AI has supercharged the US economy as of late, Europe could be missing out. In fact, Lagarde warned that Europe already has too little data centre capacity to meet its own demand – before factoring in the growth of AI. 

“The EU’s new gigafactories are a start, but they will fill only a fraction of it,” Lagarde said. “Europe needs to build at a different pace altogether.”

Closing the gap could cost as much as €600bn

While Lagarde wants Europe to close the gap, building the capacity will require an enormous amount of capital. It’s estimated that to close Europe’s data centre gap over the next decade roughly €600 billion will be needed, which includes the cost of AI chips. That’s on the upper end of estimates according to the ECB, however, so it could come in lower. 

The ECB is using an Epoch AI estimate of around $38 billion for a GPU-dense 1GW AI data centre, including the servers that will be inside that data hall. If you multiply that by the 19GW shortfall, then you get roughly $720 billion, or €600 billion. Naturally, the exact cost of a data centre varies depending on where it’s built and what servers are housed inside, and the EU’s 19GW gap includes data centres of all types – not just AI data centres. 

But let’s say it’ll cost €600 billion for a minute – that’s a lot of capital to find, so who’s going to fund it? Well, Lagarde has argued that Europe needs deeper capital markets to finance the build-out, pointing to the use of bonds, private credit and securitisation alongside traditional lending in the US. 

There has been growing action in Europe and the UK as of late to try and get more capital invested in homegrown markets rather than going overseas. In the UK, that includes former Chancellor Rachel Reeves’ drive to get pension funds to invest more in UK businesses. That policy has come under criticism, however, with many noting that return on investment is far greater in other markets and therefore does not align with the fiduciary duty of the pension funds. 

Finance is only part of the challenge

Ultimately, it may not come down to capital as to whether Europe can close its data centre gap. That’s because power and permitting could decide how much actually gets built.

The Commission says long permitting procedures and limited access to energy, land and financing are already making it harder to expand European digital infrastructure – something that is felt here in the UK too. 

Those constraints are already changing where data centres can be built. Europe’s push for greater digital sovereignty has increasingly run into the practical problem of whether enough infrastructure can actually be delivered, particularly in markets where grid capacity and suitable development sites are already under pressure.

JLL’s latest EMEA research found hyperscale greenfield projects in the 2026-2028 pipeline are an average of 175km from major hub cities, up from 46km for previous developments. That suggests operators are increasingly having to follow available power and land rather than simply expanding around established markets.

That trend has already begun to push hyperscale data centres further away from Europe’s traditional hubs, with Frankfurt, London, Amsterdam, Paris and Dublin all facing increasingly tight capacity.

The proposed Cloud and AI Development Act is intended to change that trajectory. The Commission wants to at least triple EU data centre capacity over the next five to seven years and ultimately ensure supply can meet the needs of European businesses and public administrations by 2035.

But setting the target is only part of the challenge. If Europe is to avoid the 19GW gap outlined in the Commission’s baseline scenario, it will need to turn those ambitions into projects that can actually secure power, win planning approval, attract financing and get built.

That is ultimately the point behind Lagarde’s warning: Europe may want greater control over its AI future, but achieving it will require a much faster expansion of the physical infrastructure underneath it.