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Europe’s Ageing Power Plants Set for AI-Driven Data Centre Transformation

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Big tech firms, including Microsoft and Amazon, are eyeing Europe’s retiring coal and gas plants as prime locations for new data centres — tapping into their existing power grid connections, water infrastructure, and cooling systems to meet surging AI energy demands. Utilities such as Engie, RWE, and Enel see these conversions as a way to offset decommissioning costs, secure lucrative long-term power contracts, and underwrite future renewable projects.

Many of the EU’s and UK’s 153 remaining hard coal and lignite plants are scheduled to close by 2038, joining the 190 that have shut since 2005. Repurposing these sites offers utilities stable, high-margin revenues, with tech companies reportedly paying up to €20/MWh in “green premiums” for low-carbon electricity. Depending on scale — some data centres can require up to a gigawatt — such premiums could translate into contracts worth hundreds of millions to billions of euros over decades.

The approach also addresses one of Europe’s key data centre bottlenecks: grid connection delays, which can stretch over a decade. Converting old plants offers “speed to power,” significantly accelerating deployment timelines. Projects range from retrofitting existing sites to building “energy parks” pairing renewable generation with direct supply to data centres.

Engie is actively marketing 40 potential sites worldwide, including its decommissioned Hazelwood coal plant in Australia, while EDP, EDF, Enel, and Britain’s Drax are pursuing similar strategies. Some developments, such as a planned 2.5 GW facility at a former German coal plant and multiple UK sites, are already in motion — though details remain scarce for security reasons.

Industry analysts say the trend represents a diversification of utility business models, creating new revenue streams and fostering long-term tech–energy partnerships. For hyperscalers, the premium is worth paying if it secures earlier market entry in the AI race.

Australia’s Goodman Group Launches $2.7 Billion Consortium to Expand Hong Kong Data Centres

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Australia’s Goodman Group (GMG.AX) announced on Friday the formation of a $2.7 billion investment consortium with major international pension funds and investors to develop data centre infrastructure across Hong Kong.

Key Details

  • The consortium includes Dutch investors PGGM and APG, the Canada Pension Plan Investment Board, and CBRE Investment Management’s Indirect Private Real Estate Strategies. An unnamed Middle Eastern investor is also part of the group.

  • Goodman will hold a 20% cornerstone stake in the partnership.

  • The company’s shares rose 1% to A$35.08, nearing a five-month high, outperforming the flat S&P/ASX 200 index.

Assets and Market Position

  • The consortium will control four existing data centres Goodman currently holds in Hong Kong plus two centres under development.

  • Goodman’s portfolio represents about 30% of Hong Kong’s data centre market by power capacity.

  • Goodman also maintains similar data centre partnerships in Japan and Europe, with the Japanese partnership expected to hold $1.1 billion in assets by end of 2025.

Future Plans and Market Trends

  • Goodman’s CEO Greg Goodman highlighted that part of the company’s A$10 billion industrial property portfolio in Hong Kong may be redeveloped into data centres and integrated into the partnership.

  • He pointed out strong demand coming from China, driven by the rapid growth of artificial intelligence and digital transformation sectors.

  • Goodman raised A$2.54 billion in February through a share placement to fund global data centre expansion efforts.

Malaysia’s Data Centre Boom Faces Setback as Power Tariff Hikes Bite

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Malaysia’s booming data centre industry is under pressure following the implementation of steeper-than-expected power tariff hikes on Tuesday, prompting operators to urgently reassess their business models and cost structures. The increases pose a threat to the country’s ambitions of becoming a regional digital investment hub, especially as it competes with neighbours like Singapore, Vietnam, and Thailand.

Electricity accounts for the majority of operational costs for data centres, and Malaysia’s historically low power rates have been a major draw for global tech giants such as Microsoft and Google. But the new pricing structure, announced last December and detailed last month, is set to raise electricity costs by 10% to 14% for major consumers—particularly those in the ultra-high voltage category.

Gary Goh, director of Sprint DC Consulting, warned that the cost burden could be substantial: “For a 100-megawatt facility, this could translate to an additional $15 million to $20 million annually, excluding the variable fuel surcharge.” The government plans to adjust that surcharge monthly based on fuel prices and exchange rates. For June, the rate is currently zero, according to Tenaga Nasional Berhad (TNB), the national grid operator.

However, uncertainty over tiered pricing bands and how surcharges will evolve is causing anxiety among investors. Many were not prepared for the scale of the increases, prompting a potential “wait-and-see” approach from some firms, industry sources say.

Malaysia is forecast to see the fastest growth in regional data centre energy demand, with its share expected to triple to 21% by 2027, according to a May report by Bain & Co, Google, and Temasek. Yet these recent developments could prompt investors to reconsider their commitments.

Cheam Tat Inn, managing director of Equinix Malaysia, said the new tariff structure shifts a larger share of grid management and infrastructure costs onto larger data centres. Equinix, which runs two data centres in Malaysia, is already exploring alternative energy providers to cushion the impact.

The government has defended the price hikes as essential to support social spending, but industry groups are warning of unintended consequences. Mahadhir Aziz, head of the Data Centre Association of Malaysia, said the government must reconsider its position, especially as competitors in the region offer alternative locations. “Even if companies have invested in land and buildings here, they can still reconsider their investments,” he said.

Tenaga declined to comment, directing questions to the Energy Commission, which has yet to respond.