Iberdrola Plans Renewable-Powered Data Centres as Spain’s Digital Demand Soars

Iberdrola and Echelon Data Centres have announced a landmark partnership to develop large-scale data centre infrastructure across Spain, with a firm commitment to power every facility entirely through clean energy. Framed as the most extensive collaboration of its kind in Europe between an energy provider and a data centre operator, the venture aims to meet the growing power demands of the digital economy using only renewable energy.

Under the terms of the agreement, Iberdrola will take a 20 per cent stake through its subsidiary CPD4Green. Launched just last year, CPD4Green was created to serve as the core platform for Iberdrola’s expansion into sustainable data hosting across Europe. The company will be tasked with identifying grid-connected land for development and delivering continuous, around-the-clock renewable power to the data centres.

Echelon, backed by global investment firm Starwood Capital Group, will retain an 80 per cent share and take the lead on the design, construction, marketing and day-to-day operation of the data hubs.

Iberdrola’s corporate development director, David Mesonero Molina, said: “This agreement reinforces Iberdrola’s strategy of facilitating the development of data centres, which have already become a key vector for the growth in electricity demand.

“The alliance signed with Echelon will allow us to value our portfolio of sites with access to electricity connection and our ability to offer these infrastructures secure, clean and competitive energy 24 hours a day, 365 days a year.”

The first facility to emerge from this partnership will be Madrid Sur, a massive 160,000 square metre complex that will provide 144 megawatts of computing power. Energy demand for this site alone is expected to hit one terawatt-hour per year.

Echelon Data Centres’ chief investment officer, David Smith, said: “Entering the Spanish data centre market has been a strategic goal for Echelon for several years.

“Spain has material benefits for our customers: access to large-scale renewable energy with some of the lowest prices in Europe and large construction and operation capacities.”

To meet this demand, the facility will be supported by a dedicated solar photovoltaic plant on site, with Iberdrola supplying additional clean energy as needed. The location already benefits from a 230-megawatt grid connection and is scheduled to be operational before the end of the decade.

Spain’s appeal as a digital infrastructure hub is growing rapidly. The country already handles over 70 per cent of all data traffic heading into Europe, supported by its strong fibre optic networks, undersea cable connections and abundant access to affordable renewable energy.

Iberdrola is no stranger to this space. The company currently delivers over 11 terawatt-hours of electricity each year to major tech companies. It holds a pipeline of data centre projects in Spain totalling 700 megawatts, with potential future capacity exceeding 5,000 megawatts.

This strategic alliance comes amid growing concern over the environmental impact of AI and the data sector more broadly. A recent BloombergNEF study found that global data centre electricity consumption could double by 2050, with AI responsible for a significant share. If current trends continue, these facilities could consume nearly 9 per cent of the world’s total electricity within the next 25 years.

As the power demand accelerates, many fear that clean energy infrastructure may struggle to keep up. Some businesses may be tempted to revert to traditional energy sources, such as oil and gas, to maintain growth.

But not everyone is willing to make that tradeoff. A growing number of companies are choosing to decarbonise their operations by generating and storing energy on-site.

According to a recent EY survey that polled 2,400 executives across eight global markets, around 20 per cent of medium and large businesses have already invested in their own power generation and battery storage systems. Another two-thirds are planning to ramp up these efforts within the next three years.