Data centers are no longer merely technical storage facilities for data; they have become a core pillar of the modern economy. Without this physical foundation, neither Industry 4.0, digital transformation, nor applications of artificial intelligence can be realized. Demand for computing power is growing at a rapid pace: over the past ten years, the industry has seen an increase in IT connection capacity of more than seventy percent. Yet while digital sovereignty is frequently discussed in theory, Germany risks falling behind in practical implementation. Despite available capital and strong demand, the country faces significant structural challenges.
Power supply as a bottleneck
The most pressing problem in expanding digital infrastructure is not a lack of willingness to invest – it is the availability of energy. Electricity has become the new limiting factor. In many regions, German power grids are already operating at their limits, and grid expansion is lagging far behind actual demand. Particularly critical are the delivery times for essential hardware components: operators now face waiting periods of up to four years for key equipment such as transformers.
These delays have far-reaching consequences. Forecasts indicate that Germany could face a capacity shortfall of at least one gigawatt of IT power as early as 2028. In the Rhine-Main region, one of the world’s most important data hubs, the electricity bottleneck could persist well into the late 2030s. Without secure grid connections and competitive electricity prices, investments become increasingly unattractive, and energy-intensive projects are relocating to neighboring countries.
Paul Ronzheimer in conversation with Jerome Evans, founder and CEO of firstcolo, discussing an alarming bottleneck: the lack of energy for the digital future.
Bureaucracy slows the pace of innovation
In addition to physical infrastructure, bureaucratic inertia represents a major competitive disadvantage. While data centers in the United States are often completed within one to two years, comparable projects in Germany currently require three to four years. Approval procedures are too complex and time-consuming to keep pace with the rapid innovation cycles of the tech industry. Once a symbol of technological leadership, Germany is now experiencing a third consecutive year of economic stagnation marked by insolvencies and industrial relocation. Progress is being managed rather than actively enabled.
Additional regulatory hurdles – such as ongoing debates around the AI Act –create planning uncertainty even before technologies reach market maturity. This structural sluggishness causes Germany to lose not only time, but also value creation and jobs. To remain internationally competitive, the industry urgently needs deregulation and “fast lanes” to accelerate approvals for critical infrastructure projects.
The dilemma of waste heat utilization and land scarcity
Sustainability has long been a mandatory requirement for modern data center operators. For example, the new Energy Efficiency Act requires that waste heat generated by data centers be made available for reuse – a sensible measure that could supply municipal facilities such as swimming pools or private households. However, many municipalities still lack the necessary infrastructure, particularly district heating networks, to absorb this energy. Planning and rollout of these heat networks is progressing far more slowly than data center expansion itself.
Conclusion: Policymakers must act now
The diagnosis is clear: Germany is heading toward a significant infrastructure capacity gap unless bureaucratic barriers and energy supply bottlenecks are decisively addressed. For businesses and operators to act, policymakers must now create the right conditions. This requires close cooperation – not only between politics and industry. The responsibility lies with policymakers, who must rise above partisan interests and agree on a long-term, unified strategy to strengthen Germany as a business location.
Time is running out. Germany urgently needs to prioritize grid expansion, implement pragmatic approval processes, and recognize data as a valuable industrial asset. Only if decisive action is taken now and domestic capacities “Made in Germany” are built can digital sovereignty be secured in the long term, dependencies in critical digital infrastructure reduced, and the decline of entire industries potentially averted.
