Summary Under the proposed Cloud and AI Development Act (CADA), applicants seeking "data centre strategic project" status must submit a comprehensive proposal containing two distinct categories of evidence. First, per Article 14(2), the applicant must provide "all the necessary and relevant information to demonstrate that the project fulfils the relevant criteria," proving it meets at least two of the five strategic criteria listed in Article 14(1). Second, per Article 14(3), the applicant must include "the information necessary to substantiate the predicted lifetime of the project," as this prediction directly determines the duration of the strategic designation. Failure to provide accurate, verifiable data on these points risks the withdrawal of the status under Article 14(4).

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, establishes a mechanism to accelerate the deployment of data centres by designating specific projects as "strategic." This designation is not automatic; it requires a rigorous application process where the burden of proof lies entirely with the applicant. The core requirements are codified in Article 14 of the proposal.

The Dual Obligation: Criteria Compliance and Lifetime Substantiation

A successful proposal must address two mandatory components defined in the text of the Regulation.

1. Demonstrating Compliance with Strategic Criteria (Article 14(1) & (2)) The proposal must demonstrate that the project fulfils at least two of the five specific criteria outlined in Article 14(1). Article 14(2) imposes a strict evidentiary burden, stating: "In its proposal, the applicant shall provide all the necessary and relevant information to demonstrate that the project fulfils the relevant criteria."

This requirement means that a mere assertion of compliance is insufficient. The applicant must supply the specific data points that map directly to the chosen criteria:

  • Criterion (a) – Essential Public Sector Functions: If claiming this, the applicant must provide information showing the infrastructure "directly supports and enhances essential public sector functions." This includes evidence linking the data centre's capacity to specific outputs in "research and education, healthcare, public safety and security."
  • Criterion (b) – Sustainability and Innovation: For projects claiming "highly sustainable or innovative features," the proposal must detail these features. Crucially, the text specifies that these features should include "technologies and solutions developed under Title II" of the Act. Applicants must therefore reference specific Title II initiatives (such as energy-efficient cooling, waste heat recovery, or quantum computing prototypes) and provide technical specifications proving their inclusion.
  • Criterion (c) – Grid Security and Stability: To satisfy this criterion, the applicant must provide information demonstrating a contribution to the "security, safety, and stability of the electricity grid." The text explicitly highlights projects involving the "colocation of large clean energy generation and storage facilities." Furthermore, the proposal must include an evaluation by the "relevant system operator" confirming that the project meets "electricity system needs."
  • Criterion (d) – EU Supply Chain Integration: If the project supports the integration of Union-made hardware, the applicant must provide information proving that the project supports "chips, processors and accelerators, servers or quantum computers designed and/or manufactured in the Union." This requires supply chain documentation verifying the design and manufacturing origins of the components.
  • Criterion (e) – Addressing Capacity Shortages: For this criterion, the applicant must demonstrate that the project "addresses a major shortage of compute capacity in an area identified as having such a shortage under Article 15." Additionally, the proposal must show that the project "contributes significantly to the growth, development and promotion of the local economy."

2. Substantiating the Predicted Lifetime (Article 14(3)) A critical and often misunderstood element of the proposal is the requirement to define the project's lifespan. Article 14(3) states: "The duration of the designation as a strategic project shall be based on the predicted lifetime of the project. The applicant shall include in the proposal the information necessary to substantiate the predicted lifetime of the project, on the basis of which the duration of the designation as strategic project shall be determined."

This provision creates a direct causal link between the data provided in the proposal and the legal duration of the status. The applicant cannot simply request a standard term (e.g., 10 years); they must provide the "information necessary to substantiate" their specific prediction. While the text does not enumerate a specific list of documents for this purpose, the requirement for "substantiation" implies that the applicant must provide technical and financial evidence, such as engineering assessments of infrastructure longevity, business plans projecting operational viability, and maintenance strategies that support the claimed lifespan. The Commission will use this substantiated prediction to set the duration of the designation.

Consequences of Inaccurate or Insufficient Information

The proposal includes a robust enforcement mechanism to ensure the integrity of the strategic project list. Article 14(4) empowers the Commission to withdraw the designation if:

  1. The project "no longer fulfils the relevant criteria"; or
  2. The designation was "based on an application containing incorrect information affecting compliance with those criteria."

If the Commission withdraws the designation, the project "shall lose all rights connected to that status under this Regulation." This underscores the necessity of providing accurate, complete, and verifiable information in the initial proposal. Speculative claims regarding sustainability, grid contributions, or supply chain origins that cannot be substantiated by the "necessary and relevant information" required by Article 14(2) could lead to the loss of the strategic status and associated benefits.

What this means for you

For data centre operators, cloud service providers, and investors preparing a proposal under the proposed CADA, the application process is a high-stakes exercise in evidence gathering. You must move beyond marketing narratives and prepare a dossier of verifiable technical and financial data.

  1. Select Your Two Criteria Strategically: Do not attempt to claim all five criteria unless you have evidence for all. Instead, identify the two criteria where your project has the strongest, most documentable evidence. For example, if your project is in an underserved region (Criterion e) and uses EU-manufactured chips (Criterion d), focus your resources on gathering the specific data required for those two.
  2. Gather Third-Party Validation Early: For criteria involving grid stability (c) or capacity shortages (e), you cannot self-certify. You must secure letters of support, technical assessments, or evaluations from relevant system operators and regional authorities before submitting the proposal. The text explicitly requires the "relevant system operator" to evaluate grid contributions.
  3. Document the Supply Chain Rigorously: If claiming Criterion (d), ensure you have a complete audit trail for your hardware. You must prove that chips, processors, or servers were "designed and/or manufactured in the Union." Contracts, certificates of origin, and design documentation are essential.
  4. Build a Defensible Lifetime Case: Treat the "predicted lifetime" as a core component of your application, not an administrative footnote. Engage your engineering and financial teams to create a robust justification for the project's operational life. This includes technical longevity assessments and financial viability models. Remember, the duration of your strategic status depends entirely on this substantiated prediction.
  5. Verify Accuracy Before Submission: Conduct a rigorous internal audit of your proposal. Ensure that every claim regarding sustainability, public sector support, or supply chain integration is backed by the "necessary and relevant information" required by Article 14(2). Providing incorrect information that affects compliance is a direct path to the withdrawal of your status under Article 14(4).

Common misconceptions

Misconception 1: "Innovation" is a vague, self-declared term. Many applicants believe they can simply label their project as "innovative" to satisfy Criterion (b). However, Article 14(1)(b) specifically links innovation to "technologies and solutions developed under Title II" of the Act. You must demonstrate that your project incorporates specific technologies (e.g., energy-efficient cooling, waste heat recovery) that align with the objectives of the Cloud and AI Leadership Initiatives defined in Title II.

Misconception 2: The strategic designation is permanent. The status is not a lifetime badge. Article 14(3) explicitly ties the duration of the designation to the "predicted lifetime" of the project. Furthermore, Article 14(4) allows the Commission to withdraw the designation if the project ceases to meet the criteria or if the initial application contained incorrect information. The status is conditional and time-bound.

Misconception 3: One strong criterion is sufficient. Applicants often assume that a single, highly impactful criterion (e.g., massive grid contribution) is enough. Article 14(1) is clear: the project must fulfil "at least two" of the listed criteria. A proposal that only addresses one criterion, no matter how significant, will not meet the threshold for designation.

Misconception 4: The Commission sets the duration arbitrarily. The duration is not determined by a standard template or a fixed number of years. It is derived directly from the "information necessary to substantiate the predicted lifetime" provided by the applicant in the proposal. The quality and defensibility of your lifetime substantiation directly influence how long you retain the strategic status.

Related

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