Berlin is easing efficiency requirements for existing data centres while tightening waste-heat obligations for new builds. For investors, that shifts the valuation logic of entire portfolios while grid connection continues to decide both returns and feasibility.
Two decisions that reshuffle the market
In little more than three months, the German federal government has moved the regulatory framework for data centres twice. On 18 March 2026 the cabinet adopted the first National Data Centre Strategy, comprising 28 measures across three fields of action: energy and sustainability, location and land use, and technology and sovereignty. The quantitative target is explicit: the IT connection capacity of German data centres is to at least double by 2030 relative to 2025, with capacity for high-performance computing and AI at least quadrupling.
On 24 June 2026 the cabinet approved the draft amendment to the Energy Efficiency Act (EnEfG). It has not yet entered into force, but its direction is already actionable for capital allocators, because it treats the asset class’s two main cost drivers very differently: existing stock is relieved, new builds are put under greater obligation.
Relief for existing stock, tighter rules for new builds
For existing data centres, PUE thresholds are to be loosened: from 1 July 2027 a maximum PUE of 1.6 instead of 1.5, and from 1 July 2030 a maximum of 1.4 instead of 1.3. This sounds technical, but it is a valuation question. Older colocation and enterprise assets that under the previous regime looked like candidates for expensive retrofit or early write-down gain remaining useful life and therefore capital value. In addition, the threshold triggering the requirements is raised to 500 kW, taking smaller assets and edge sites out of scope.
Conversely, the waste-heat obligation applies to every data centre commissioned from July 2026 onwards: at least 10 percent of waste heat must be reused, rising to 15 and 20 percent for facilities commissioned in 2027 and 2028 respectively. Internal heat reuse counts towards the quota, and a new exemption applies where no reasonable connection to a heat network exists within a five-kilometre radius. That five-kilometre clause is the genuinely underrated point: it turns distance to the nearest district heating network into a hard, quantifiable site criterion in acquisition screening.
Grid connection remains the bottleneck and the price
Regulation shifts costs; grid connection still determines whether a project exists at all. Frankfurt remains Europe’s second-largest data centre market: inventory grew 23 percent year-on-year in the first quarter of 2026 to roughly 1,222.5 MW, with vacancy at around 5 percent. At the same time, available connection capacity in the core area is effectively zero. Lead times for high-voltage connections run 24 to 36 months, no new utility-scale substations are expected in the supply area before the second quarter of 2027, and grid upgrades in central Frankfurt are considered unlikely before the 2030s.
Across Europe, CBRE describes the same picture from the demand side: vacancy is forecast to fall to an all-time low of around 6.5 percent by the end of 2026, because grid bottlenecks cap how much new capacity can reach the market at all. Cushman & Wakefield puts EMEA at 11.4 GW of operational capacity, 2.7 GW under construction and 12.1 GW planned the gap between planned and under construction is the grid queue expressed in numbers.
Capital follows power, not the address
Capital inflows are unfazed by this they are simply relocating geographically. Colliers reports record data centre volumes across EMEA in the second quarter of 2026 and a broad shift of capital towards operationally intensive, platform-led sectors. In Germany, it is above all strategic investors creating facts on the ground: Google has announced investments of around EUR 5.5 billion with Hesse as the focal point, a substantial share of which flows into the Dietzenbach site in the Offenbach district, where a partnership with regional utility EVO is already in place to feed waste heat to roughly 2,000 households. AWS is reported to have earmarked multi-billion sums for the greater Frankfurt area, and Microsoft and Oracle have announced billion-euro programmes of their own.
In parallel, the map is shifting. According to Bitkom data, Brandenburg has announced projects totalling roughly 888 MW of IT connection capacity, while Berlin has around 146 MW of installed IT capacity. Locations such as Hanau, Dietzenbach and the Berlin hinterland benefit from having power and land available where the core market no longer does. The valuation question is becoming less “how close to DE-CIX?” and more “how firm is the connection commitment and when does it land?”.
What this means for investors
- Re-underwrite existing stock: The planned PUE relief can lift assets priced as retrofit cases back into core-plus territory. Anyone who underwrote heavy modernisation reserves in 2025 should revisit those assumptions – though the law has not yet been passed.
- Check the five-kilometre heat-network radius: For new builds and forward deals, proximity to a heat network now determines either compliance cost or exemption. That belongs in site due diligence, not in the permitting phase.
- Treat grid connection as a standalone asset: With 24 to 36 months of lead time, a binding connection commitment is often worth more than the land. Contracts, deadlines and withdrawal rights should be structured accordingly.
- Secondary locations selectively, not wholesale: Available power is necessary but not sufficient; connectivity, permitting practice and local acceptance determine exit viability.
This is precisely the interface of real estate, engineering and energy where Prime East works through its dedicated arm PE Property Solutions: site screening, technical due diligence and structuring built around the question of whether a project is genuinely deliverable in grid and regulatory terms not merely on the drawing board.
Conclusion
Germany’s data centre market gained its political tailwind in 2026: a national strategy with clear capacity targets and an EnEfG amendment that relieves existing stock. The limiting factor remains physical. Whoever can reliably secure grid connection, heat-network access and permitting will set pricing in a market with historically low vacancy. Everything else is pipeline on paper.
Disclaimer: This article is for information purposes only and does not constitute investment, legal or tax advice. All figures are based on the publicly available sources listed below; as of 30 July 2026. The EnEfG amendment is still in the legislative process and has not yet entered into force.
Sources
- BMDS – Federal government adopts the National Data Centre Strategy
- BMDS – National Data Centre Strategy (publication)
- CMS – EnEfG amendment brings relief for data centres
- DENEFF – Energy Efficiency Act (EnEfG) amendment 2026 explained
- CBRE – European Data Centres Outlook 2026
- CBRE – Global Data Center Trends 2026
- Cushman & Wakefield – Global Data Center Market Comparison 2026
- Colliers – EMEA Capital Markets Snapshot Q2 2026
- neospaces – Frankfurt Data Centres: FRA1 Power Constraints and Pipeline Migration
- hessenschau – Google invests EUR 5.5 billion, Hesse becomes a key location
- JLL – The new geography of the German data centre market
- FPS Law – Data Centres in Germany 2026: Infrastructure Policy
