Bitkom: Legal opinion: Electricity price relief must also apply to data centers

Data centers must be included in electricity price reductions. This is the result of a legal opinion commissioned by the digital association Bitkom. The findings: not only is relief permissible under European law, in the opinion of the report it is even necessary for the existing EU regulations to achieve their objective. “Data centers are the backbone of industry and the economy. If we want to protect energy-intensive industries, we must not leave their digital infrastructure out in the cold,” says Bitkom President Dr. Ralf Wintergerst. “Without high-performance data centers, neither Industry 4.0 nor AI applications nor networked production processes will work.”

As the report shows, the current EU regulations on electricity price relief are aimed at preventing the migration of energy-intensive industries. Data centers are not included in the relevant list of affected industries, although they are an essential part of precisely those industries that are to be protected. “If data centers are not built in Europe, they are built where energy prices are cheaper. Environmental and safety standards are often lower there,” emphasizes Wintergerst. “If the EU wants to prevent industrial relocations, it must also protect the digital basis of this industry.”

Data centers in Germany currently consume around 21 billion kilowatt hours of electricity per year, by 2030 it will be around 30 billion kilowatt hours.Electricity costs are the biggest cost factor and account for around half of a data center’s operating costs. Unlike traditional production facilities, however, they are more flexible in their choice of location. The risk of new capacities being created outside Europe is correspondingly high, as the report concludes. It was prepared by Prof. Dr. Christian Koenig, LL.M. (LSE), Director at the Centre for European Integration Studies (ZEI) at the University of Bonn.

In this context, the report warns of a domino effect: if computing capacities are built on a large scale outside Europe due to high electricity prices, European companies will become newly dependent. This is because cloud and AI performance are increasingly becoming a location factor, including for energy-intensive manufacturing industries. Higher latencies, rising cyber and data risks and geopolitical uncertainties would increase. In extreme cases, industry will follow the digital infrastructure abroad because computing capacities and AI capabilities are closer, cheaper or more reliably available there. The report describes this risk as “adhesion migration”: industry follows data centers, which would have serious consequences for value creation and innovation in Europe. Wintergerst: “Digital sovereignty is not decided in strategy papers, but in concrete investment decisions. If we don’t act and include data centers in the electricity price reductions, we risk gradually losing key parts of our digital infrastructure.”

The report makes it clear that the European state aid frameworks are administrative guidelines and must be applied in such a way that the formulated objectives are actually achieved. If an industry list effectively excludes digital infrastructures such as data centers, even though they are indispensable for the protected industries and even though there are clear expansion targets, a contradiction arises. In addition, data centers are upstream basic infrastructure. Their exclusion undermines the effectiveness of the relief instruments and leads to discriminatory and competition-distorting effects in the individual end markets. This is precisely why the inclusion of data centers is necessary for reasons of proportionality and coherence. The report also shows ways in which inclusion can be carried out in a legally secure manner: Either through a functional interpretation of the existing rules or, where criteria do not reflect digital business models, through appropriate additions. Alternatively, funding can be justified directly on the basis of EU treaty law.

Bitkom is appealing to the EU Commission to take data centers into account in the electricity price reductions – and to the German government to advocate for this at European level. Wintergerst: “The reduction in electricity prices has been announced in the coalition agreement, now there are no more excuses. Reducing the operating costs of digital infrastructures strengthens our digital sovereignty.”  

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Further links

👉 Download the legal opinion here

👉 To the press release