Summary Under the proposed Cloud and AI Development Act (CADA), the Commission would be able to designate a data centre project as a "strategic project" only if the project is selected through an open call for expressions of interest and fulfils at least two of five criteria set out in Article 14(1). The five criteria, as proposed, are: supporting essential public sector functions; including highly sustainable or innovative features; contributing to electricity-grid stability and system needs; integrating EU-designed or EU-made chips, servers or quantum computers; and addressing a major compute-capacity shortage in an underserved area while boosting the local economy. Designation would not be automatic, would last for the predicted lifetime of the project, and could be withdrawn.

Detail

CADA — formally COM(2026) 502 final, a proposal that is not yet in force — sets out a mechanism for the Commission to single out data centre projects that deliver significant added value to the Union's digital and energy sectors. These would be designated "data centre strategic projects." The stated aim is to accelerate high-quality, sovereign and sustainable compute infrastructure and to channel public support towards projects that meet clear criteria.

The legal basis is Article 14 of the proposal. Under Article 14(1), the Commission "may, by means of a decision, designate as strategic projects, data centre projects selected through open calls for expressions of interest that fulfil at least two of the following criteria". Two points follow directly from this wording: selection runs through an open call, and a project must meet two or more of the five criteria — meeting only one would not be enough.

The five criteria, as proposed in Article 14(1)(a)–(e), are set out below.

1. Support for essential public sector functions

Under Article 14(1)(a), a project qualifies if it "establishes and operates infrastructure that directly supports and enhances essential public sector functions, including research and education, healthcare, public safety and security."

This targets infrastructure serving critical societal needs rather than purely commercial workloads — for example, a facility purpose-built to host sensitive healthcare data, support national research, or underpin emergency-response systems. The emphasis on "directly supports and enhances" implies the infrastructure should be configured for the security, availability and performance demands of public-sector workloads.

2. Highly sustainable or innovative features

Under Article 14(1)(b), a project qualifies if it "include[s] highly sustainable or innovative features, including technologies and solutions developed under Title II."

Title II of CADA covers the Union's Cloud and AI leadership initiatives, so projects piloting technologies developed under those initiatives would have a clear claim here. "Highly sustainable" would point to facilities that go beyond standard environmental benchmarks — for instance through advanced cooling, substantial waste-heat recovery, or high shares of clean energy. Note that the criterion itself does not name a specific efficiency standard; any reference to external benchmarks should be treated as illustration rather than a legal requirement.

3. Grid stability and electricity-system needs

Under Article 14(1)(c), a project qualifies if it "contributes to the security, safety, and stability of the electricity grid and contributes to the electricity system needs as evaluated by the relevant system operator, in particular for projects involving the colocation of large clean energy generation and storage facilities."

Data centres are large electricity consumers but can also support the grid. This criterion favours "grid-friendly" projects — for example those colocating with large-scale clean generation and storage, or operating as flexible loads. The text expressly ties the assessment to evaluation "by the relevant system operator," so validation from the grid operator would be central to a claim under this criterion.

4. Integration of EU chips, servers and quantum technologies

Under Article 14(1)(d), a project qualifies if it "supports the integration of chips, processors and accelerators, servers or quantum computers designed and/or manufactured in the Union into data centre systems or data centre facility management, thereby strengthening the Union semiconductor, quantum and data centre supply chains and contributing to the objectives of this Regulation and of Regulation (EU) 2023/1781."

This is the technological-sovereignty criterion. Note the explicit hook to Regulation (EU) 2023/1781 (the EU Chips Act): commitments to use EU-designed processors or EU-made quantum hardware would both strengthen the Union supply chain and align with the Chips Act's objectives.

5. Addressing a compute-capacity shortage

Under Article 14(1)(e), a project qualifies if it "addresses a major shortage of compute capacity in an area identified as having such a shortage under Article 15 and contributes significantly to the growth, development and promotion of the local economy."

This addresses geographic imbalance in data centre deployment. Article 15 tasks the Commission with monitoring the Union's available compute capacity, demand, and the size of the capacity gap, including underserved areas that could be used as acceleration zones. A project in such an identified area would qualify only if it both alleviates the shortage and contributes significantly to the local economy — both limbs are required.

Selection, duration and withdrawal

Meeting two criteria is the threshold, not the whole process. Under Article 14(1) projects are selected through "open calls for expressions of interest," and under Article 14(2) the applicant "shall provide all the necessary and relevant information to demonstrate that the project fulfils the relevant criteria."

Designation would not be permanent. Under Article 14(3) its duration "shall be based on the predicted lifetime of the project," which the applicant must substantiate in the proposal. Under Article 14(4), the Commission could withdraw the designation if the project no longer meets the criteria, or if the designation was based on an application containing incorrect information affecting compliance; a project that loses the designation "shall lose all rights connected to that status under this Regulation."

A related point on benefits: recital 42 of the proposal notes that, given the importance of these projects, Member States "may, without prejudice to Articles 107 and 108 TFEU, apply support measures in a proportionate manner" — so designation could open the door to public support, but subject to EU state-aid rules.

What this means for you

For data centre operators and cloud providers, assessing a project against these criteria early in the design phase would determine eligibility. As proposed:

  • Plan for two criteria, not one. A well-rounded project — for example combining highly sustainable features (criterion b) with EU-hardware integration (criterion d) — has a stronger and more robust case than one leaning on a single criterion.
  • Document public-sector value. If you serve research, healthcare, public-safety or security functions, record how your infrastructure directly supports and enhances them.
  • Engage grid operators early. Criterion (c) depends on the relevant system operator's evaluation, so secure that input before applying.
  • Source EU hardware. Commitments to EU-designed or EU-made chips, servers or quantum hardware feed criterion (d) and the Chips Act objectives it cites.
  • Target identified shortage areas. Criterion (e) requires both an Article 15 capacity gap and a significant local-economy contribution — evidence both.

Common misconceptions

  • "Meeting one criterion is enough." No. Article 14(1) requires "at least two" of the five criteria. The criteria are alternatives to choose among, not a single cumulative test — but two of them must be satisfied.
  • "Strategic status is automatic." No. It would require selection through an open call for expressions of interest and a formal Commission decision; the applicant must apply and provide evidence.
  • "Only large hyperscalers can qualify." The criteria turn on a project's strategic value — innovation, public-sector support, local economic impact — not solely on scale, so they need not exclude smaller operators.
  • "The designation is permanent." No. Its duration is tied to the project's predicted lifetime and it can be withdrawn under Article 14(4).
  • "Designation guarantees funding." Designation may open the door to Member State support measures (recital 42), but those remain subject to Articles 107 and 108 TFEU; it is not an automatic grant.

Related

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