The Spanish government’s decree affecting data centers has sparked controversy. Following the harsh criticism from the sector’s trade association, Spain DC, last week, Microsoft and Merlin Properties have joined in, both with billion-dollar plans to build data centers.
Both companies have submitted their own allegations to the draft decree, which the government wants to use to regulate the deployment of data centers. Along with regional governments and environmental associations, they have sent over 600 allegations to the Ministry of Ecological Transition and Demographic Challenge.
Microsoft sources indicate that the multinational sent comments on the draft decree and are “delighted to continue contributing and participating in the open debate on data center regulation.” Merlin Properties, on the other hand, states that they have submitted “allegations to the proposed decree that they considered relevant, and now they are waiting to see how the proposal evolves.”
Government Regulation
The central government will approve a demanding normative soon. Although the Executive may soften the requirements in the final decree, its message is clear: there is no room in Spain for all the planned data centers. The key is which projects can adapt to the new reality, reconfiguring their engineering, with consequent economic damage to already mature initiatives.
Several promoters have acted independently to demand that the decree be adapted to their needs. The government’s chosen criterion for selecting projects is access to energy. The electrical grid cannot accommodate all projects, but the government wants the power to reject data centers, even if they have been granted access to energy.
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In Aragón, Blackstone has guaranteed 650 megawatts (MW) of access for large consumers, while Merlin has 227 MW from permits it purchased from Forestalia. However, Microsoft does not have guaranteed access to the Red Eléctrica system, as all its requests (for a 1,222 MW energy project) are in substations that have gone to auction.
Energy Efficiency
Microsoft sources also emphasize that the tech giant “shares the objective of promoting ordered, sustainable, and responsible development of digital infrastructure” and stresses “the importance of advancing in a balanced manner in terms of energy efficiency, responsible resource management, resilience, and digital sovereignty.” Sustainability is a central element of Microsoft’s global data center strategy.
Microsoft has been working for years to build and operate increasingly energy- and water-efficient infrastructure and increase the use of carbon-free energy. The company’s environmental commitments include being carbon-negative, water-positive, and zero-waste by 2030.
The Spanish Data Center Association, Spain DC, has flatly rejected the draft Royal Decree regulating energy sustainability, environmental, resilience, and digital sovereignty requirements for the sector, which could put a significant amount of planned investment at risk in the coming years.
Investment Risks
Spain DC’s president, Emilio Díaz, and executive director, Begoña Villacís, revealed that the potential investment at risk is 9,000 million euros if the decree is finally applied. This could transform the norm into a “de facto ban” for the sector, they warned, while also raising doubts about its legal framework.
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According to Spain DC’s latest annual report, direct and indirect investments in the sector between 2026 and 2030 could reach 66,900 million euros, with a positive impact on the national economy. However, the government’s proposal could put 80-90% of new investment at risk, which would likely be redirected to other European destinations.
As the government moves forward with its plans, the situation will unfold and the approved projects will be determined. The decree’s impact on the sector and the economy will depend on the final requirements and how they are implemented.
The outcome is uncertain.
It will be decided soon.
Emilio Díaz and Begoña Villacís are waiting for the final decision.