Summary As proposed, the Cloud and AI Development Act (CADA) does not create a new, standalone set of technical energy efficiency standards. Instead, Article 11 mandates that Member States apply the existing key performance indicators (KPIs) established under the Energy Efficiency Directive (EED) 2023/1791 and its implementing Delegated Regulation (EU) 2024/1364 to all data centres deployed within designated "data centre acceleration zones." This approach ensures consistent environmental standards across the Union and prioritises energy-efficient technologies in new installations by leveraging a harmonised, pre-existing regulatory framework rather than fragmenting the market with divergent national rules.

Detail

The Cloud and AI Development Act (CADA), proposed by the European Commission on 3 June 2026 (COM(2026) 502 final), seeks to address the critical shortage of computing capacity in the EU while maintaining high environmental standards. A central mechanism for achieving this is the creation of "data centre acceleration zones" to speed up deployment. However, rapid expansion carries the risk of environmental degradation. To mitigate this, CADA integrates existing EU energy efficiency frameworks directly into its acceleration mechanism, ensuring that speed does not come at the expense of sustainability.

The Legal Mechanism: Article 11 and the EED Link

The primary provision governing energy efficiency requirements is Article 11 of the CADA proposal, titled "Conditions within acceleration zones." This article acts as a bridge, connecting the new acceleration zones to the established body of EU energy law.

Paragraph 1 of Article 11 explicitly states:

"When setting sustainability requirements for data centres deployed in acceleration zones, Member States shall use the key performance indicators specified in Delegated Regulation (EU) 2024/1364 pursuant to Directive (EU) 2023/1791 under Annex II, from (a) to (n)."

This citation is legally significant for three reasons:

  1. Direct Reference to EED 2023/1791: It anchors CADA's sustainability requirements to the Energy Efficiency Directive (EED) 2023/1791, ensuring alignment with the EU's broader climate and energy goals.
  2. Specific KPIs via Delegated Regulation: It points to Delegated Regulation (EU) 2024/1364, which operationalises the EED by defining the specific metrics data centres must report. This avoids the need for CADA to list technical metrics in the main text, allowing for more agile updates via delegated acts if necessary.
  3. Mandatory Application: The use of "shall" imposes a strict obligation on Member States. They cannot substitute these KPIs with national alternatives or lower standards when designating acceleration zones.

The KPIs referenced in Annex II of Delegated Regulation (EU) 2024/1364 cover a comprehensive suite of environmental metrics, including:

  • Power Usage Effectiveness (PUE): The ratio of total facility energy to IT equipment energy.
  • Water Usage Effectiveness (WUE): The volume of water consumed per unit of IT energy.
  • Carbon Usage Effectiveness (CUE): The carbon emissions associated with energy consumption.
  • Waste Heat Reuse: The percentage of waste heat recovered and reused.
  • Greenhouse Gas Emissions: Direct and indirect emissions.
  • Energy Consumption per Unit of IT Load: Efficiency of the IT infrastructure itself.

By mandating these specific indicators, CADA ensures that "sustainability" is defined objectively and measurably. This creates a harmonised baseline for what constitutes an energy-efficient data centre, preventing a "race to the bottom" where Member States might otherwise lower environmental standards to attract investment in their acceleration zones.

Prioritising Energy-Efficient Technologies in New Installations

While Article 11 sets the regulatory floor via KPIs, the broader architecture of CADA actively promotes the adoption of next-generation, energy-efficient technologies. The proposal recognises that meeting KPIs requires more than just better reporting; it requires technological innovation.

Article 4, which outlines the operational objectives of the Cloud and AI Leadership Initiatives, explicitly supports the development and deployment of advanced data centre technologies. Under operational objective 1, the proposal aims to support:

  • Advanced data centre energy efficiency technologies, such as innovative cooling and waste heat recovery.
  • Next-generation direct current data centres.
  • Energy storage systems and the integration of clean energy generation.
  • The optimisation of energy and water efficiency by design.

Furthermore, Annex I of the proposal, which details the "Grand Challenges," sets ambitious, forward-looking targets. For instance, Grand Challenge 1 aims to achieve an average Power Usage Effectiveness (PUE) of 1.15 across the Union and raise average server utilisation rates towards 50%. While these targets are framed as objectives for research, innovation, and pilot lines rather than immediate legal mandates for every single operator, they signal the technological direction the EU expects the market to move towards.

New installations in acceleration zones are implicitly expected to align with these state-of-the-art benchmarks. The combination of mandatory KPIs (Article 11) and innovation incentives (Article 4 and Annex I) creates a dual pressure: operators must meet current efficiency standards to operate, while the market environment rewards those who adopt the cutting-edge technologies required to exceed them.

Ensuring Fair Access and Preventing Speculation

Article 11 also addresses the economic dimension of sustainability. Paragraph 2 requires Member States to ensure that the allocation and use of resources within acceleration zones takes place on "fair, reasonable and non-discriminatory terms."

This provision is designed to prevent speculative reservation of resources. Without it, large incumbents could hoard land, energy connections, or water rights in acceleration zones without deploying efficient infrastructure, thereby blocking smaller, more innovative, or more efficient operators. By mandating fair access, CADA ensures that the acceleration zones serve their purpose: to rapidly deploy sustainable capacity, not just any capacity. This protects the integrity of the energy efficiency requirements by ensuring that the most efficient projects can actually secure the resources needed to be built.

What this means for you

For CTOs, data centre architects, facility managers, and SMEs evaluating the practical impact of CADA, the implications are clear: energy efficiency compliance is no longer a voluntary "green" initiative but a mandatory prerequisite for operating in the EU's high-growth zones.

1. Compliance is Mandatory in Acceleration Zones If your data centre project is located within a designated acceleration zone, you must adhere to the KPIs set out in Delegated Regulation (EU) 2024/1364. This is not optional. Member States are obligated to enforce these standards as part of the sustainability requirements for these zones. You should immediately audit your current or planned infrastructure against these specific metrics (PUE, WUE, CUE, waste heat reuse, etc.) to ensure readiness. Failure to meet these KPIs could result in the denial of permits or the loss of access to the acceleration zone's streamlined permitting processes.

2. Leverage Existing Standards, Do Not Wait for New Ones You do not need to wait for new CADA-specific technical guidelines. The standards already exist under the EED and its Delegated Regulation. Your engineering and procurement teams should familiarise themselves with the metrics in Annex II of Delegated Regulation (EU) 2024/1364. Investing in technologies that improve these metrics—such as advanced liquid cooling, waste heat recovery systems, and renewable energy integration—will not only ensure compliance but also position your facility as a leader in the emerging sovereign cloud market.

3. Strategic Advantage for SMEs and New Entrants SMEs and smaller mid-caps (SMCs) should view these requirements as a barrier to inefficiency rather than just a cost. By designing facilities that meet or exceed these KPIs, you can differentiate your services in the public sector market. While the sovereignty framework (Articles 16–24) focuses on data control and provider ownership, the underlying infrastructure's efficiency contributes to the overall resilience and sustainability profile valued by public procurers. Furthermore, CADA's measures to support SMEs, such as access to Centres for AI and simplified permitting, are designed to help smaller players meet these high standards.

4. Long-Term Planning and Future-Proofing Given that CADA aims to triple EU data centre capacity in the next five to seven years, the push for energy efficiency will intensify. Early adoption of energy-efficient technologies will future-proof your investments against stricter national implementations of the EED and potential updates to the CADA framework via delegated acts. The KPIs are not static; they are part of a dynamic regulatory framework that will likely tighten as the EU moves towards its 2030 and 2035 climate targets.

Common misconceptions

Misconception 1: CADA introduces a new, unique set of energy efficiency rules. Reality: CADA does not create new technical standards for energy efficiency. Instead, it mandates the application of existing EU law (the Energy Efficiency Directive 2023/1791 and Delegated Regulation (EU) 2024/1364). This ensures consistency with the broader EU energy policy framework and avoids regulatory duplication.

Misconception 2: These requirements apply to all data centres in the EU. Reality: Article 11 specifically applies to data centres deployed in acceleration zones. While other EU laws (like the EED) apply more broadly, the specific CADA mandate to use the listed KPIs as a condition for acceleration zone deployment is tied to this specific framework. However, as Member States designate these zones to meet capacity targets, the de facto standard for new, large-scale data centres will likely become these KPIs.

Misconception 3: Energy efficiency is the only sustainability concern. Reality: While energy efficiency is central, CADA also emphasises other aspects of sustainability, such as water usage (WUE) and waste heat reuse. The KPIs referenced in Article 11 are comprehensive, covering multiple environmental impacts, not just electricity consumption. The reference to "Annex II, from (a) to (n)" in the Delegated Regulation ensures a holistic approach.

Misconception 4: SMEs are exempt from these requirements. Reality: The sustainability requirements in Article 11 apply to data centres in acceleration zones regardless of the operator's size. However, CADA includes specific measures to support SMEs, such as access to Centres for AI and simplified permitting processes, to help them meet these standards. The goal is to level the playing field, not to exclude smaller players.

Related

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