Marcus Emadi | Director at Turning Point Capital
CONTENTS
Five years after the Dutch capital imposed a shock moratorium on new data centers, the market is still feeling the effects
July 12, 2019, was shaping up to be a normal day for Amsterdam’s many digital infrastructure providers. Life appeared to be pretty good in what was one of Europe’s most popular data center markets. Then came an announcement from the Municipality of Amsterdam that changed everything.
The municipality, which covers the historic heart of the Dutch capital, along with the adjoining precinct of Haarlemmermeer, announced an immediate ban on all new data center developments.
This moratorium was lifted a year later, but as the five-year anniversary of this surprise decision approaches, its effects are still being felt across the market.
The Aftermath of the 2019 Moratorium
“Amsterdam is still a top-tier market; it’s currently the third biggest in Europe, but it’s about to drop to number four because Paris will soon grow to a greater size,” says Andrew Jay, head of data center solutions at CBRE. “It’s always been number three, but the original moratorium really knocked the wind out of Amsterdam’s sails.”
Further restrictions and moratoriums have followed, meaning Amsterdam has lost ground on its rivals that it may never recover.
The Moratorium’s Rationale
The reason for a moratorium, the municipalities said, was primarily one of space. DCD reported at the time that officials decided to impose the pause to ensure “that data centers occupy as little space as possible… and [architecturally] fit in well with the environment.”
“The arrival of data centers is, in a sense, a result of our own consumption and lifestyle: We want to be online on our phones and laptops all day,” said Marieke van Doorninck, Amsterdam’s alderman for sustainability and spatial development. “To a certain extent, we will have to accept the associated infrastructure, but the space in Amsterdam is scarce.”
Haarlemmermeer apparently had similar concerns, with Mariëtte Sedee, alderman for spatial development, environment, and agricultural affairs, adding: “The space in our municipality is of great value… It is necessary to be on-site and formulate policy first, so that we keep a better grip on the location of data centers.”
At the time, Amsterdam had become a victim of its own success, with its data center market regularly growing at a rate of 10-15 percent a year.
The city’s status as a connectivity hub for Europe ensures it is an attractive proposition for operators, Jay says. “It became a big Internet exchange point around the time of the dotcom-boom,” he explains. “It doesn’t have as many big enterprise companies as Paris or Frankfurt, but this interconnectivity drove demand.
“The moratorium knocked everyone for six because we didn’t have as much demand as we have today, but here was one of the main cities saying: ‘You can’t come to this area.’”
Though the ban only covered two of Amsterdam’s districts, its effect, says Edgar van Essen, was to suggest the entire city was closed for new data center business. Van Essen is managing director of Amsterdam-based Switch Datacenters, which runs four facilities in the region, so has witnessed the impact of the ban firsthand.
“The image of the whole of Amsterdam was negatively hit by decisions from a small part of Amsterdam,” he says. “The misconception in the market was that the city had shut down, whereas, in fact, the moratorium related to two municipalities representing less than 20 percent of it.
“But if Americans see headlines saying ‘Amsterdam is closed,’ then they won’t do any further reading, they’ll just move on to another city.”
Market Slowdown and Impact on Growth
The initial moratorium ended in 2020, when an agreement was reached to allow new data centers to be built in designated areas of the two municipalities, providing they met stringent energy efficiency requirements.
The Dutch Datacenter Association (DDA) helped broker the agreement on behalf of its members. Stijn Grove, its managing director, says the initial moratorium was damaging because “trust in a market is hard to gain but easy to lose.”
Grove says: “The moratorium on new projects then had significant impacts on the local data center market, influencing both its immediate and long-term dynamics. Initially, the sudden halt on new construction was, of course, a shock to the industry and, in hindsight, not needed as in terms of policies, nothing has really changed since.”
Indeed, Amsterdam already had stringent rules in place around the efficiency requirements for data centers, with new builds required to achieve a Power Usage Effectiveness (PUE) rating of 1.2, and existing facilities having to hit 1.3.
On the impact of the moratorium, the DDA’s State of Dutch Data Centers 2024 report, published at the start of June, notes that in recent years “growth in the Dutch colocation market had slowed significantly.”
The report says: “The moratorium in Amsterdam and Haarlemmermeer, caused the international demand, especially for wholesale data center space, to drop strongly and move to other locations across Europe.”
Data from the DDA shows that the total number of data centers in the Netherlands was lower last year (187) than in 2019 (189). There are also fewer colo companies operating across the country, with 95 last year compared to 111 in 2019. While other factors will have played a part, given that the Amsterdam metropolitan area represents 71 percent of the entire Dutch market, per the DDA’s figures, it is likely the moratorium has had an impact.
Amsterdam is also lagging behind its Tier One rivals in the other FLAPD markets—Frankfurt, London, Paris, and Dublin—when it comes to adding new capacity. According to CBRE, last year it gained an additional 62MW, significantly less than any of the other FLAPD nations (London, the second lowest, added 82MW). And in the first quarter of 2024, no new capacity was brought online.
Political Motivations and Broader Impacts
Van Essen believes the initial moratorium was politically motivated. Despite Amsterdam’s status as a data center hub, the industry’s impact on the environment means it has come under close scrutiny for many years.
Microsoft has been engaged in a long-running battle with farmers living near its data center campus in Hollands Kroon, 50km outside Amsterdam, where Google and CyrusOne also operate facilities. The farmers say the data centers are encroaching on valuable and limited agricultural land, while the high volume of water consumed by the campus has also raised eyebrows during recent droughts.
Elsewhere, in 2022 Meta killed a plan to build a 200MW data center in Zeewolde, east of Amsterdam. The five-data hall facility would’ve been the largest campus in the Netherlands at the time, but having initially been given planning permission, Facebook’s parent company ran into opposition from the Dutch Senate, as part of the land for the data center was owned by the government. Lawmakers decided not to sell this land, and as a result, the project bit the dust. The site has since been unzoned, meaning it cannot be used for data centers.
“There are a lot of very negative opinions about big data centers in the minds of politicians,” Van Essen says. “As a result, they came up with these rules that bash the industry harder. The rules were the result of a political climate where declaring that you were against data centers became the right thing to say at parties.”
Lessons from Singapore and Other Global Markets
Those concerned about the long-term impact of the Amsterdam moratorium may not be reassured by developments in Singapore, which is emerging from a moratorium imposed by the city-state’s government in 2019. This was imposed after concerns were raised about a lack of power and development space in the market.
The ban was slightly relaxed in 2022, with new developments permitted subject to being granted licenses, and in May, the country’s Infocomm Media Development Authority (IDMA) revealed a plan to unlock up to 300MW of capacity by making existing data centers more efficient. The IDMA said it will work with operators to put the so-called Green Data Center Roadmap into action.
However, the damage may have already been done. A report from financial analysts BMI said the roadmap is unlikely to persuade data center investors, who have fled Singapore to neighboring markets like Malaysia and Indonesia, to return.
“Our core view is that large-scale data center capacity investments are unlikely to go back to Singapore as a result of global key trends in the industry and momentum held by neighboring markets, primarily Malaysia,” BMI’s report said, pointing out that the 300MW on offer in Singapore is dwarfed by the combined 2,500MW of new capacity that is expected to be on offer in other markets in the region over the next few years.
The Future for Amsterdam’s Data Center Market
Amsterdam isn’t the only FLAPD market that has imposed a moratorium on new data center developments.
In Dublin, grid operator EirGrid imposed a moratorium on new developments in 2022, which is set to last until 2028. This was put in place because of the amount of power data centers are consuming; figures published last year by Ireland’s Central Statistics Office showed that data center power consumption in the country increased by 31 percent in 2022, accounting for 18 percent of all electricity used in Ireland.
Data center developments are still permitted elsewhere in Ireland with few restrictions, and a separate report from the International Energy Agency, released in January, said data centers could gobble up 32 percent of Ireland’s power by 2026 due to the number of new builds planned.
The Road Ahead
The complex web of regulations, moratoriums, and political pressures has left Amsterdam in a position where it may struggle to regain the momentum it once had in the data center market. While the city remains a key player, the impact of restrictions and a shift in investor focus to other markets could result in Amsterdam losing its top-tier status. The future of the market will depend on how quickly the city can address these concerns and adapt to the changing dynamics of global data center demand.
