Summary As proposed, the Cloud and AI Development Act (CADA) would encourage power purchase agreements (PPAs) for data centres, including in data centre acceleration zones, to give long-term price stability and support clean electricity. Recital 38 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." Unlike default grid supply at volatile market prices, PPAs let operators lock in renewable energy. The proposal treats sufficient, timely energy supply as a "fundamental enabling condition" for these zones, and links zone planning to grid development under Article 10. CADA is a proposal (COM(2026) 502 final), not yet in force.

Detail

The CADA proposal recognises that data-centre deployment is constrained by energy availability and cost. Its energy provisions sit mainly in Articles 10 and 11 and in Recital 38; the PPA encouragement itself is expressed in Recital 38 rather than in a standalone PPA article.

Energy supply as a fundamental precondition

Recital 38 states that "sufficient and timely energy supply to the acceleration zones constitutes a fundamental enabling condition for their effective deployment and for the development of data centre capacity across the Union."

To operationalise this, Article 10(2) provides that Member States, where appropriate to facilitate acceleration zones, shall conduct — and review at least every three years — a comprehensive analysis of the energy needs (and their greenhouse-gas impacts) of current and future zones, identifying the required energy-infrastructure capacity. That analysis must feed national network development plans prepared by transmission and distribution system operators under Directive (EU) 2019/944, "considering the potential of anticipatory investments to accommodate future system needs." This shifts grid planning from reactive to anticipatory.

The role of PPAs in acceleration zones

Recital 38 explains the rationale: "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." It then 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."

So the proposal's preference for PPAs rests on two points:

  1. Price stability: long-term predictability, valuable for capital-intensive data-centre financial modelling.
  2. Clean energy at scale: sourcing renewable electricity to support reliable operations and the clean-energy transition.

This is framed as encouragement (a recital-level "should"), not a binding obligation in the operative articles.

Comparison with default grid procurement

Default grid procurement. Operators connect to the local grid and buy at regulated or market tariffs — simple, but without long-term cost certainty, and with "greenness" depending on the grid mix. Under Article 11(1), when Member States set sustainability requirements for data centres in acceleration zones, they must use the key performance indicators in Commission Delegated Regulation (EU) 2024/1364 (adopted under the Energy Efficiency Directive (EU) 2023/1791), Annex II points (a) to (n). Relying solely on default grid supply can make demonstrating these KPIs over time harder.

PPA-driven supply. A PPA is a bilateral contract between a generator (often renewable) and a consumer (the operator), letting the operator:

  • Lock in rates and reduce exposure to volatile markets.
  • Source renewable energy directly, aiding the Article 11 sustainability KPIs.
  • Support grid development, where structured to align with the "anticipatory investments" referenced in Article 10(2).

The proposal does not prohibit default grid supply; it would create a regulatory environment that lowers friction for PPAs, consistent with the "grid-friendly" aim in Recital 38.

Member State obligations

Under Article 10(2)(b), Member States shall ensure that network development plans take due account of the energy-needs analysis, considering anticipatory investments. Recital 38 adds that Member States should facilitate clear, efficient grid-connection procedures and flexible connection agreements, and clarify connection conditions under Directive (EU) 2019/944. The combination — streamlined permitting via zone status plus facilitated energy procurement — is intended to reduce total cost of ownership while protecting grid stability and environmental goals.

What this means for you

For cloud service providers and data centre operators, the CADA proposal signals more proactive energy management.

  1. Weigh PPAs in site selection. Within acceleration zones, favour locations where Member States have actually removed barriers to PPAs (per Recital 38), for cost certainty and easier sustainability reporting.
  2. Engage grid planners early. Because Article 10(2) feeds energy-needs analysis into grid planning, demonstrating how your demand profile (flexible demand, waste-heat reuse) supports grid stability can strengthen your case.
  3. Prepare for sustainability KPIs. Article 11(1) requires the Delegated Regulation (EU) 2024/1364 KPIs. PPAs often carry detailed environmental attributes (e.g. guarantees of origin) that streamline this reporting; default grid supply may not.
  4. Monitor national implementation. Since the PPA promotion and barrier-removal sit at recital and Member-State level, watch national transposition and acceleration-zone designation to spot remaining hurdles.

Common misconceptions

Misconception 1: CADA mandates PPAs for all data centres.

  • Reality: No. The proposal encourages PPA uptake (Recital 38) but does not require them. Operators may still rely on default grid supply, accepting more price volatility and potentially harder sustainability reporting.

Misconception 2: Acceleration zones guarantee grid capacity.

  • Reality: No. Zones streamline permitting and require energy-needs analysis, but do not physically guarantee connection. The text emphasises anticipatory investments; actual capacity still depends on technical feasibility and investment timelines.

Misconception 3: PPAs are only for large hyperscalers.

  • Reality: PPAs are often associated with large buyers, but the proposal's focus on removing unjustified barriers could help smaller-scale or aggregated PPAs, potentially benefiting smaller operators too.

Related

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