The Spanish government’s proposed regulation for data centers has cleared the Council of State, overcoming a significant hurdle that had previously fueled speculation of a potential deadlock. The advisory body, chaired by Carmen Calvo, formally cleared the draft on Friday, clearing a path for the administration to bring the measure to the Council of Ministers as early as next Tuesday, El Mundo reported. The decree received the unanimous backing of the Council’s members.
Although the Council of State has not yet released the final text of its opinion, the project—officially titled the "Draft Royal Decree regulating energy sustainability, environmental, and resilience and digital sovereignty requirements applicable to data centers"—was confirmed as dispatched on Friday.
Data Centers Face Strict Renewable Energy Mandates
The decree aims to impose strict mandates on data center operators, requiring them to source at least 80% of their electricity from new renewable energy installations. Furthermore, operators must demonstrate that this energy is produced during the same hours it is consumed. The government maintains that these measures are essential to prevent the surge in artificial intelligence-driven demand from inflating gas consumption and electricity prices. The industry, represented by the trade association Spain DC, has consistently labeled these requirements as unattainable. According to El Mundo, the government has incorporated a transition period and softened some technical conditions to ease the burden, yet companies warn that the rules will significantly increase project costs and threaten billions of euros in planned investments. The final text extends the deadline to link operations to new renewable generation from 18 to 36 months, enables technical adaptation periods through a power reduction system, and sets transitional margins for energy efficiency until 2031.
Government Defends Digital Sovereignty Data Restrictions
The Executive defends digital sovereignty restrictions—which mandate that data from high-category systems under the National Security Scheme must be kept on EU or European Economic Area soil—under the guise of public safety. The government emphasizes that these regulations do not limit capital ownership or the corporate control of technology giants. To avoid the regulation being annulled by Brussels due to a lack of prior consultation, the document relies on extensive jurisprudence from the Court of Justice of the European Union to demonstrate that environmental and energy requirements concern the implementation of fixed installations, and therefore did not require prior approval from the European Commission.
The Scope of Future Legal Challenges
The government faces a potential wave of litigation from both industry stakeholders and regional governments, including Madrid and Aragon, which have expressed concerns that the decree infringes on regional competencies and jeopardizes established investments. El Mundo reported that the final version of the decree, drafted after receiving 632 public submissions, includes a "second additional provision" allowing operators to renounce their grid access and connection permits within six months without facing financial penalties or the loss of deposits. This provision is designed to mitigate claims regarding the violation of "legitimate expectations" for projects that may no longer be viable under the new regulatory framework. Despite these adjustments, the administration acknowledges that a significant portion of current projects will likely be abandoned. The government notes that network managers have already granted access to over 12 gigawatts (GW) of capacity—a figure that triples the government’s own 2030 projections for data center needs, which were set at between 3.5 and 4 GW in the Artificial Intelligence Strategy. Additionally, electrical grid operators have rejected requests for more than 32 GW due to a lack of available capacity.
Lingering Questions on European Oversight
A central point of contention throughout the legislative process has been the government’s decision to bypass the "Tris" mechanism, a formal procedure that requires notifying the European Commission of new regulations affecting the internal market. The National Commission for Markets and Competition (CNMC) had previously suggested that the European Commission should have been consulted, particularly regarding the decree’s provisions on digital sovereignty. The pronouncement by the Council of State comes despite the rejection of much of the technology sector and warnings from the CNMC. The administration is now working to finalize the decree before the national elections scheduled for November 29.
