23/06/2026 in Developments, News, Views from Echelon

This month the European Commission published its European Technological Sovereignty Package, built around a draft law, the Cloud and AI Development Act (CADA). The package arrived alongside a second Chips Act, an EU open-source software strategy and a roadmap for digitalising the energy sector. For companies building, powering or financing data centres, CADA will be a package to watch very closely.

Echelon Data Centres welcomes CADA as a constructive and timely signal of intent. The Act recognises that capacity cannot be scaled on ambition alone, but on secured power, responsible grid integration and a planning system able to keep pace with demand.

The Commission’s central objective is to triple the EU’s data centre capacity within five to seven years. The target was first set out in the 2025 AI Continent Action Plan and has now been given legislative form. The rationale is sovereignty as according to IEA’s estimate, Europe’s share of global data centre capacity has fallen to around fifteen per cent, while the United States and China have advanced rapidly. The Commission has concluded that depending on providers outside the EU for the computing capacity beneath its hospitals, banks and public administrations represents a strategic exposure it is no longer prepared to accept.

CADA asks member states to establish “data centre acceleration zones” which are designated areas with the power availability and planning clearance to host new capacity at speed. Within these zones, the proposal would allow qualifying data centre projects to be treated as being in the overriding public interest, a status intended to streamline environmental permitting. It also points to harmonised fast-track permitting across member states and to capital from a proposed European Competitiveness Fund, with grid integration treated as a strategic priority.

A separate track introduces a four-level cloud sovereignty framework, enabling public bodies to assess how far a given service is insulated from foreign control. It ranges from a baseline Level 1, which requires data to be processed and stored in the EU, up to Level 4, which requires full supply-chain control with no third-country interference. The stricter tiers, Levels 3 and 4, would in effect require providers to be owned and operated within the EU.

These rules are the most contested part of the package. Large international providers have characterised the proposals as protectionist, warning that they could fragment the single market. While some European cloud providers have broadly welcomed the direction of travel while pressing for stronger investment conditions and faster grid connection. The proposal now moves to the European Parliament and the Council, with trilogue negotiations expected to open in the third quarter of 2026 and a final text unlikely before late 2027.

Acceleration zones and Competitiveness Fund support are likely to favour markets that can demonstrate they build cleanly and connect responsibly. Ireland, which is the most developed data centre market in the Union and Europe’s largest data centre cluster by operational load, has the operators, the engineering base and the connectivity. It also has a decade of building under real constraints, producing a tested method for adding significant digital load to a constrained grid without compromising it.

Europe spent much of the last decade treating data centres primarily as a pressure on the grid, to be capped and contained. CADA has now placed them at the centre of the infrastructure intended to support the EU’s AI economy. Ireland encountered the strain earliest and worked through the lessons first, making it well positioned to help shape the model other nations may build from.

While the proposal still has its legislative path ahead, we at Echelon regard it as an important step toward delivering the digital infrastructure Europe needs and we look forward to engaging constructively as it moves through the Parliament and the Council.