Summary Yes, as proposed, the Cloud and AI Development Act (CADA) encourages power purchase agreements (PPAs) for data centres — but the encouragement sits in a recital, not in a hard operative duty. Recital 38 describes PPAs as "important instruments for data centres" and says Member States should promote their uptake, also in acceleration zones, by removing unjustified barriers and disproportionate or discriminatory procedures or charges, with a view to providing price predictability. The operative articles do not impose a standalone PPA obligation; instead they create the surrounding framework — acceleration zones, energy-needs analysis and grid planning — within which PPAs become more viable.

Detail

CADA (COM(2026) 502 final, a proposal) sets up a harmonised framework for the accelerated deployment of data centres, centred on data centre acceleration zones — areas where Member States would streamline permitting and ensure supporting infrastructure, including energy, is available. Energy cost and grid access are recognised as primary bottlenecks, and the proposal points to PPAs as a way to address them.

How CADA treats PPAs

As proposed, Recital 38 states that "Power purchasing agreements ('PPAs') are important instruments for data centres as they provide long-term price stability, while enabling data centre operators to procure clean electricity at scale, thereby supporting reliable operations and the transition to a clean energy system." On that basis, the recital says Member States "should therefore promote the uptake of PPAs, also in acceleration zones, by removing unjustified barriers and disproportionate or discriminatory procedures or charges, with a view to providing price predictability."

Two points of accuracy matter here. First, this is recital language — it explains and orients the proposal but is softer than an operative article; it uses "should," not "shall." Second, the same recital frames PPAs within a wider energy agenda that also includes clearer grid-connection procedures, flexible connection agreements, and an upcoming legal proposal to future-proof electricity bills. So PPAs are encouraged as one tool among several, not singled out as a mandatory mechanism.

Integration with acceleration zones

The PPA encouragement connects to the operative obligations on acceleration zones in Article 10. As proposed, Article 10(1) requires each Member State, where data centre capacity is being deployed in its territory, to designate at least one acceleration zone within six months of entry into force. When designating zones, Member States shall consider several aspects, including:

  • the available and future power grid capacity, and the possibility and conditions for on-site storage and clean energy generation;
  • the available and future network connectivity capacity.

As proposed, Article 10(2) further provides that Member States, where appropriate to facilitate the development of acceleration zones, shall conduct (and review at least every three years) a comprehensive analysis of the energy needs — and their impact on greenhouse-gas emissions — of current and future zones, and identify the required energy infrastructure capacity. They shall also ensure that transmission and distribution system operators' network development plans (under Directive (EU) 2019/944) take due account of that analysis, considering anticipatory investments. Promoting PPAs (Recital 38) therefore dovetails with mandatory energy-needs analysis and grid planning (Article 10).

Sustainability and grid integration

The PPA push also aligns with CADA's sustainability framing. As proposed, Article 11(1) requires Member States, when setting sustainability requirements for data centres in acceleration zones, to use the key performance indicators specified in Delegated Regulation (EU) 2024/1364 (pursuant to Directive (EU) 2023/1791), Annex II, points (a) to (n). Securing clean electricity through PPAs is one practical way for operators to evidence progress against those indicators. And because PPAs give long-term visibility into demand, they can help grid operators plan upgrades more cost-effectively — consistent with the recital's point that reliable information on future energy demand supports grid development.

What this means for you

For CTOs, architects and SMEs assessing CADA's practical impact, the PPA emphasis signals a more supportive energy-procurement environment in the EU, if the proposal is adopted.

1. Better investment certainty. As proposed, Member States would be expected to remove unjustified barriers to PPAs. For developers, that points to a more predictable path to long-term energy contracts and lower transaction costs — important for the capital-intensive economics of data centres.

2. Strategic site selection. Favour Member States and regions that designate acceleration zones (Article 10) and actively facilitate PPA uptake. Those zones will have undergone energy-needs analysis, and a healthy PPA market there can reduce supply and price risk.

3. Sustainability as well as cost. Because zone data centres must meet KPIs (Article 11), clean-energy PPAs double as a compliance tool, not just a hedge. Align procurement and sustainability teams so energy contracts support your KPI evidence.

4. Engage grid planners early. Long-term PPAs give grid operators the demand forecasts that feed network development plans. Early engagement can improve grid-connection feasibility and timelines — a prerequisite for deployment in acceleration zones.

Common misconceptions

Misconception 1: CADA mandates PPAs for all data centres. Correction: It does not. As proposed, the recital asks Member States to promote PPA uptake by removing barriers; operators keep their freedom to choose how they procure energy.

Misconception 2: PPAs only matter for large hyperscalers. Correction: The proposal's broader aim of supporting a competitive ecosystem, including SMEs, and removing "disproportionate or discriminatory" barriers, points toward making PPAs more accessible to smaller operators too — though CADA does not itself prescribe aggregated or small-scale PPA schemes.

Misconception 3: CADA sets renewable-energy targets for data centres. Correction: It does not set a renewable-energy percentage. Zone data centres must meet sustainability KPIs (Article 11), and PPAs are presented as a tool to help; the specific metrics flow from existing energy-efficiency instruments (Delegated Regulation (EU) 2024/1364), not from a CADA PPA target.

Related

This is general information about a draft EU regulation, not legal advice.