Portugal sets strict rules for data centres

Large data centre with rooftop cooling units, wind turbines and power lines highlighting new Portugal data centre rules

Key Points

01Portugal is finalising a decree-law for licensing data centres
02New projects must run on renewable energy but need not self-generate it
03Cooling must avoid fresh water or use non-conflicting alternative sources
04Industrial projects will have priority over data centres for grid access

Portugal prepares tough sustainability rules for data centres

Portugal is drafting a decree-law that will impose strict environmental and energy conditions on data centres as the country positions itself as a European hub for the sector. Environment and Energy Minister Maria da Graça Carvalho said the regulation, which is expected to be completed and submitted to the Council of Ministers by the end of this year, will define criteria for licensing and operating data centres across the country.

The new framework comes as more than 2.6 gigawatts of data centre capacity is under development in Portugal, led by the 1.2-gigawatt Start Campus project in Sines, which is backed by investments in artificial intelligence infrastructure. The Start Campus complex already has one of six planned buildings in operation, running on renewable energy and using seawater for cooling.

Mandatory renewable energy use without self-generation duty

Under the upcoming rules, data centres in Portugal will be required to operate on renewable energy. Operators will not be obliged to generate renewable power themselves, but they must source it from the grid, taking advantage of Portugal’s solar, wind and hydropower resources.

Projects will also have to contribute financially to the cost of connecting to the electricity network and provide guarantees that sufficient renewable energy will be available for their operations. The ministry has stressed that this approach differs from legislation in Spain, where self-production requirements have been included, and that the Portuguese model focuses instead on assured renewable consumption.

Stringent limits on water consumption and cooling methods

Water use will be one of the most tightly regulated aspects of the new regime. The decree will introduce what the minister described as a “great demand” regarding water consumption by data centres, which are intensive users of both electricity and water for cooling systems.

Future projects will need either cooling technologies that do not require fresh water or alternative water solutions that do not conflict with supplies for the general population and other socio-economic activities. Examples highlighted by the government include seawater-based cooling, as used in Sines, where sea water is employed instead of freshwater resources.

In addition to water restrictions, data centres will have to secure an environmental licence, including a positive environmental impact assessment. The government’s aim is to ensure that new digital infrastructure does not compromise household and business water availability while meeting climate and resource-efficiency objectives.

Licensing criteria and grid access priorities

The decree-law will set broader licensing criteria covering digitalisation, scientific research links, added economic value, and contributions to employment and wealth creation. These qualitative requirements are intended to frame data centres as contributors to Portugal’s digital transition and economic development, alongside their environmental obligations.

In terms of grid access, industrial projects will be prioritised ahead of data centres. The minister has stated that electrointensive industries, seen as generating more jobs, exports and wealth, will have their grid connection requests approved first without needing to go to auction. Other applicants, including data centres, will generally need to participate in auctions to obtain the desired grid connections.

Key Takeaways

01Portugal is coupling its data centre expansion with binding environmental safeguards on energy and water use, rather than relying on voluntary standards.
02The regulatory model obliges data centres to consume renewable electricity while allowing flexibility on how that power is sourced from the grid.
03Strict water and cooling conditions, including non-freshwater solutions, are central to protecting supplies for households and other economic activities.
04Prioritising industrial projects for grid access signals that data centres will compete for capacity and must demonstrate broader economic and digital benefits.
05The large development pipeline, led by the 1.2 GW Start Campus in Sines, will be shaped by these new rules on licensing, energy sourcing and environmental impact.

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