Finance
Analysis-Europe's old power plants to get digital makeover driven by AI boom
Published by Global Banking and Finance Review
Posted on August 5, 2025
5 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on August 5, 2025
5 min readLast updated: January 22, 2026
AI is transforming Europe's old power plants into data centres, offering utilities new revenue streams and tech firms quick access to power and water.
By Forrest Crellin
PARIS (Reuters) -Some of Europe's ageing coal and gas fired power plants can look forward to a more high-tech future as big tech players, such as Microsoft and Amazon, seek to repurpose them as data centres, with ready-made access to power and water.
Companies such as France's Engie, Germany's RWE, and Italy's Enel are looking to benefit from a surge in AI-driven energy demand by converting old power sites into data centres and securing lucrative long-term power supply deals with their operators.
The data centre option offers the utilities a way to offset the hefty costs of shutting down ageing power plants as well as potentially underwriting future renewable developments.
Tech companies see these sites as a quick way to secure power grid connections and water cooling facilities, two big bottlenecks in the AI industry.
"You have all the pieces that come together like ... water infrastructure and heat recovery," said Bobby Hollis, vice president for energy at Microsoft.
Lindsay McQuade, EMEA energy director at Amazon , said she expected permitting for data centres to move faster at old sites, where a big chunk of infrastructure was already in place.
Utilities can either lease the land or build and operate the centres themselves, securing long-term power contracts with tech firms, he said.
The deals offer much more than just the sale of unused land as they include opportunities for stable, high-margin revenue, said Simon Stanton, head of Global Partnerships and Transactions at RWE.
"It's more about the long-term relationship, the business relationship that you get over time that enables you to de-risk and underwrite your infrastructure investments," Stanton said.
Most of EU's and Britain's 153 hard coal and lignite plants are set to close by 2038 to meet climate targets, joining the 190 plants that have closed since 2005, based on data from NGO Beyond Fossil Fuels, which campaigns to accelerate closure of coal-fired power stations.
NEW REVENUE STREAMS
The economics of data centre deals can be compelling for the utilities, which can negotiate a long-term power supply contract to underwrite future renewable developments.
Tech firms are paying premiums of up to 20 euros per megawatt-hour for low-carbon power, said Gregory LeBourg, environmental program director at French data centre operator OVH.
Data centre power demands can be anywhere from a couple hundred megawatts to a gigawatt or more. So the annual 'green premium' - the extra price paid for low-carbon electricity - on top of a base market price could potentially translate into a long-term contract worth hundreds of millions or even billions of euros, based on Reuters' calculations.
One long-term option is to build an "energy park" and connect the data centre to a new renewable development, relying on the grid for emergencies, but this is a relatively new concept, industry sources said.
Engie wants to double its installed renewable energy by 2030 from the current 46 GW. The group has identified 40 sites globally that it is marketing to data centre developers, including coal and gas plants that could be converted, said Sebastien Arbola, who runs the company's data centre business.
One is the Hazelwood coal plant in Australia, which closed in 2017. He declined to disclose details of other sites, saying they are mostly in Europe.
Other utilities, including Portugal's EDP, EDF, and Enel said they are also marketing old gas and coal sites for new data centre development.
"It's business model diversification," said Michael Kruse, managing partner at consultancy Arthur D. Little.
Utilities are creating a new type of business and also new revenue streams, he said.
'SPEED TO POWER'
The appeal for tech companies is speed.
Grid connection delays in Europe can stretch over a decade, while repurposed plants potentially offer speedier access to power and water.
"You actually have the opportunity to move faster," said Hollis at Microsoft.
Data centre capacity in Europe is much lower than the United States and Asia due to longer grid connection times and slower permitting, data from Synergy Research Group showed.
The data centre operators can choose to buy the renewable power they need directly from the utilities in the form of long-term contracts or purchase from the power market.
Real estate firm JLL is working on several conversions, including a 2.5 GW data centre at a former German coal plant and four sites in Britain for a major tech client, said Tom Glover, who works on data centre transactions at JLL.
Developers do not often disclose more detail about data centre projects, including their clients, for security reasons.
Britain's Drax is also seeking a partner to develop unused parts of an old coal site in Yorkshire, now partially converted to biomass. It offers access to unused water cooling equipment, said Richard Gwilliam, Drax's carbon programme director.
Drax is offering a "behind-the-meter" deal where the power plant will provide direct power to the data centre and it can pull from the grid if necessary.
EDF has also chosen developers for two sites at gas power plants in central and eastern France.
Tech companies are willing to pay more for projects that can start up sooner as they vie for market share in a rapidly growing industry, said Sam Huntington, director of research at S&P Global Commodity Insights.
"Speed to power is just the phrase we keep hearing over and over again," he said.
(Reporting by Forrest Crellin in Paris; additional reporting by Leo Marchandon in Gdansk, Francesca Landini in Milan; editing by Nina Chestney, Dominique Patton and Jane Merriman)
Artificial Intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think and learn like humans.
Data centers are facilities used to house computer systems and associated components, such as telecommunications and storage systems.
Renewable energy is energy derived from natural processes that are replenished constantly, such as solar, wind, and hydroelectric power.
A power plant is an industrial facility for the generation of electric power, typically using various energy sources.
Economic benefit refers to the financial gain or advantage that results from a particular action or investment.
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