The Royal Decree That Has the Data Center Sector in Spain on Edge

The summer of 2025 ended with a regulatory move that has shaken the foundations of the Spanish tech industry. At the end of August, the Government presented the long-awaited royal decree to regulate data centers, a regulation that, according to authoritative voices in the sector, could become a burden instead of a boost. The chosen date, in the middle of the news low season, was no accident: the Executive sought to minimize media noise, but the sector has not taken long to raise its voice.

Begoña Villacís, executive director of SpainDC, the association that groups the main data center operators in Spain, does not hide her skepticism: "We knew there was going to be a regulatory development and, frankly, the offhandedness with which it was presented is symptomatic, but it doesn't surprise us. The same thing happened in 2025." For Villacís, the problem is not only the timing, but the substance of a rule that, as drafted, she considers represents "a de facto prohibition of the sector in Spain."

The criticism is not isolated. Robert Assink, founding member of Corevia Advisory and CEO of CTS Group, goes a step further: "The data center sector is far more relevant than many politicians and governments think." Assink denounces that Spain "wants to be more papist than the pope" with a regulation that exceeds what Europe demands and the standards that the industry itself has already imposed. In a context where agentic AI and generative models are driving up demand for computing, Spanish regulation could be putting spokes in the wheels of a strategic sector.

The Dark Spots of the Royal Decree: Efficiency, Renewables, and Impossible Deadlines

SpainDC submitted objections to the royal decree, and its criticisms focus on several fronts. The first, energy efficiency. Assink is blunt: "Spain, having a hotter climate than Norway, Denmark, or even Germany, cannot aspire to have higher energy efficiency than a very cold country. It is technically impossible." The expert claims that the sector is already "super-efficient, the best student in the class," and accuses the Government of demanding a grade of 10 from someone who already has a 9.8.

Valentín Pinuaga, general director for Spain at Equinix, shares the sustainability goals but qualifies: "I see it as a bit difficult for all data centers built from now on to meet the highest level." Pinuaga focuses on renewable coverage: the royal decree requires 80% renewable energy in all time slots, something he considers unviable. "If they ask me to have all time slots, the problem comes during hours without sunlight. You need another renewable source to cover during the night. You would have such a high cost that the numbers don't add up."

Another conflicting point is the requirement for the age of renewable plants: the norm sets a minimum of 18 months, which penalizes data centers that have been using clean energy for years. "18 months seems very aggressive to us. I'm not an energy expert, but it's very little time to develop a photovoltaic or wind plant," adds Pinuaga. This legal uncertainty and possible retroactive effects are, according to Villacís, a source of million-dollar litigation: "If you suddenly change the conditions on which investments of enormous volume have been committed, you expose yourself to billion-dollar claims."

Water Consumption: A Myth That Clouds the Debate

Assink also attacks the public perception about water consumption of data centers: "Saying that data centers use up the country's water is outrageous. If you ask for the water bill of a data center, it will show you what the kitchen, toilets, and bathroom faucet consume." In Spain, many operators already work with closed-loop systems, which minimizes the use of this resource. However, the narrative imported from the United States, where data centers do compete for water and electricity with local communities, is catching on in Spanish public opinion.

"In Spain, we must regulate according to the reality of Spain, not importing or oversizing problems that don't exist here," states Villacís. Pinuaga agrees: "The developments in the United States are immensely larger than those in not only Spain but the rest of the surrounding European countries. We are not a threat or a problem, nor do we intend to be."

The Race for Investment: Spain Competes Against Europe

The royal decree comes at a time of effervescence for the data center market. The emergence of AI has transformed needs: not everything requires being close to the end user. Assink explains: "The data lake and data training do not require being close to the end user, but they do require a lot of processing capacity and electrical power." Inference, on the other hand, does need proximity. The big battle, however, is not distance, but the availability of electrical power. "If Badajoz has power availability before Ciudad Real, A Coruña, or Zaragoza, it will win the prize," he exemplifies.

Spain has become an attractive destination, but it is not the only one. "Madrid, Aragon, and Barcelona are today the most relevant hubs, but there are many important projects in other regions," notes Villacís, who mentions opportunities in the Valencian Community, Castilla-La Mancha, Extremadura, the Basque Country, or Navarra. A Savills report placed Málaga as the 11th most attractive city in the world for data center investments, ahead of Marseille and Porto. But competition is fierce: "Spain does not compete with itself; companies compare countries," stresses Villacís. Portugal, Italy, Ireland, or France are direct rivals.

Assink compares it to the railway: "If there is a railway, then multiple trains will pass through there. End customers will not want to have their infrastructure in ten places." And he warns: "If it's in Spain, fantastic; if it's in another country, also. But they won't go to both countries." In this sense, regulatory uncertainty plays against. "The sector will go where there are conditions to develop real projects: grid, land, connectivity, deadlines, and security to invest," insists Villacís.

The Need to Regulate, but with Common Sense

Despite the criticisms, Equinix defends that digital infrastructure should be regulated like any other critical infrastructure. "The digital world becomes an essential service. When we talk about telecommunications networks, everyone understands that if they go down, they won't be able to use their phone. Data centers are a structural part of data transmission networks," argues Pinuaga. "If you remove data centers from the picture, you lose the ability to have essential services such as access to banking or public administration."

The Equinix executive theorizes that the royal decree wants to get ahead of problems seen in other countries: "In that sense, it's good, but perhaps they have gone a bit too far. With such restrictive regulations, you might achieve the opposite effect, that a thriving industry goes elsewhere." Assink adds that Spain has a digital infrastructure deficit compared to other European countries: "Simply to meet the needs of the digital services we use every day, we need more data centers and more digital infrastructure."

Transparency is another battleground. Assink advocates for "creating transparency" to reach public opinion, although he acknowledges that big tech doesn't always help: "Specialized data center operators are far more transparent, but they don't have as much name recognition for the general public." At a time when the cloud and digital services are omnipresent, the industry must better explain its role and its commitment to sustainability.

The debate is open. While the Government defends that it wants "data centers, but the best, sustainable, efficient, and sovereign," the sector warns that the norm, as it stands, can scare off investments and slow down AI development in Spain. The ball is in the Executive's court, which must decide whether to adjust the text so as not to drown an industry that, well regulated, could be a first-rate economic engine. As Pinuaga recalls, "we are not a threat or a problem, nor do we intend to be." The question is whether Spain will know how to seize the opportunity or whether, on the contrary, it will watch as other countries win the prize.

Original source: ComputerWorld. Analysis and adaptation by ForgeNEX.