Local strategies required for handling data centres

Data centres are commonly associated with images of endless rows of high-performance servers, continuously storing and processing millions of pieces of data and making them available for a wide range of services. However, such visualisations say little about the location requirements that the establishment of data centres entails and what impact these data centres have on the places where they are located. Alongside broadband networks, data centres are part of the core digital infrastructure. Their capacity has developed rapidly over the past 15 years. This is currently being further intensified by the increasing demand for data processing for artificial intelligence (AI) applications. In 2025 alone, installed output increased by nine per cent compared to the previous year.

From a municipal perspective, data centres are of interest in at least two respects. Firstly, they form part of digital public services, representing an indispensable infrastructure for the digitalisation of administrative services and all applications in a smart city. Data centres, especially those in municipal ownership, enable cities, municipalities and districts to maintain and expand their data sovereignty and make themselves independent of global cloud providers. They are part of the critical infrastructure of our cities and are, in turn, a prerequisite for the security and resilience of other basic utilities and services.

The second focus of municipal attention is the establishment of data centres and the associated economic and location policy. Cities and regions have long been in competition with each other when it comes to the provision of space and the accelerated planning and approval of data centres. To date, however, there are very few reliable figures available in relation to development dynamics; only development hotspots can be identified. The Frankfurt-Rhine-Main conurbation is leading the way by some distance, followed by Berlin-Brandenburg, the Cologne-Düsseldorf region and the Munich and Hamburg metropolitan areas. However, there are also smaller development centres spread across Germany in both urban and rural regions.

When it comes to choosing a location, data centre operators are influenced by several factors. Topics that repeatedly come up include the connection to Internet nodes, the existing economic and digital “ecosystem”, and the availability of powerful power lines and – in association with this – maximum reliability.

It is to be expected that regions in which there are already a large number of data centres today will continue to be the centres of development in the future. This can be explained by the so-called data gravity effect: existing data volumes and data services attract more data. Data therefore generates more data. Instead of setting up new data centres in other locations, existing local capacity is increased because there is demand for it. It is therefore not surprising that Frankfurt am Main, as a major service hub in the finance and insurance industry, has long since surpassed all other regions to become the prime location for data centres.

Here, the trend is for extremely large data centres, known as hyperscale data centres. However, there is also an opposing trend: in order to reduce delays in the transmission of data signals and achieve the lowest possible latency (measured in milliseconds) and thus carry out real-time data processing, smaller, decentralised data centres are being set up close to end users. Data centre capacities are currently growing, particularly in the colocation market segment, i.e. the provision of rental space in data centres for companies’ IT hardware.

In terms of energy and resource management, hyperscalers in particular are viewed critically. They require a considerable amount of space and extensive networks for data transmission as well as a robust infrastructure to ensure 24/7 operation. Data centres are currently regarded as the fastest growing energy-intensive sector in Germany. At the start of 2025, based on calculations by Borderstep Institut für Innovation und Nachhaltigkeit gGmbH, the German Federal Ministry for Economic Affairs and Climate Action put the electricity consumption of data centres in Germany at around 20 terawatt-hours per year, which corresponds to around four per cent of gross electricity consumption. This is also expected to double or quadruple over the next 20 years. The dynamic growth of data centres poses further challenges: competition for land use, safety requirements, land prices, urban integration, and air and noise emissions. At the same time, the question arises as to how the waste heat from data centres can be put to good use.

The tension is obvious: the dynamic development of data centres with their importance for the local economy and digital ecosystems is set against aspects such as urban planning, architectural quality, technical infrastructure and resource consumption. The direct spatial impact of data centres is also the reason why an ad hoc working group was set up in December 2025 by the Academy for Territorial Development in the Leibniz Association (ARL), also involving the German Institute of Urban Affairs (Difu). The aim of the working group is to determine the management requirements and design options in discussions held with planning stakeholders and data centre operators.

The city of Frankfurt am Main offers an interesting example of how to handle data centres. Instead of making decisions on a case-by-case basis, the city has reacted strategically and developed a data centre concept as part of the update to its commercial space development concept. Among the aims of its urban planning control is the designation of suitable areas and exclusion areas, the formulation of guidelines covering site selection, functional mix, design, etc., as well as integration into municipal heat planning.

Elsewhere, there are also discussions about how to handle data centres. This is important and welcome – what is crucial is the overall strategic assessment and the answers to these key questions: How much value is retained locally? What are the binding requirements for site selection, grid integration and waste heat utilisation? How can economic interests be aligned with climate, land and commercial development goals? The extent to which planning should be controlled is not uncontroversial. With its large players, the industry operates internationally, reacts sensitively to regulatory requirements and, according to Bitkom, is already complaining about the length of planning and authorisation procedures. In that respect, the issue is political. Nationally, the aim is to develop Germany into a leading digital location globally and to drive forward the expansion of digital infrastructure in the form of data centres. However, this should not lead to the relinquishment of local control. After all, once data centres have been set up, their effects are primarily felt locally. In this context, municipal design requirements are not an obstacle, but a necessary prerequisite for social acceptance.

Pre-print from the Difu Magazine Reports 1/2026