Where will the data centre acceleration zones be in Hungary under CADA?

Under the proposed Cloud and AI Development Act (CADA), the European Commission will not pre-select specific geographic locations for Hungary's data centre

Summary Under the proposed Cloud and AI Development Act (CADA), the European Commission will not pre-select specific geographic locations for Hungary's data centre acceleration zones. Instead, the Hungarian government holds the sole discretion to designate these areas, provided they meet strict EU-wide criteria. As proposed in Article 10, Hungary must designate at least one acceleration zone within six months of the regulation's entry into force, but only if data centre capacity is being deployed in its territory. The selection process is governed by eight specific technical and environmental criteria, including a mandatory preference for brownfield sites, grid capacity, and waste-heat reuse potential. Furthermore, any data centre deployed in these zones must adhere to sustainability Key Performance Indicators (KPIs) defined in Delegated Regulation (EU) 2024/1364, as required by Article 11.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, introduces a harmonised framework to accelerate the deployment of sustainable data centre capacity across the European Union. For Hungary, as for all Member States, the critical question is not if acceleration zones will exist, but where they will be located and what criteria will govern their designation. CADA fundamentally shifts the locus of decision-making from the EU Commission to national authorities. While the regulation sets the deadline and the rules, the Hungarian government is responsible for identifying specific geographic areas that meet stringent technical, environmental, and procedural standards.

The Obligation to Designate

Article 10(1) of the CADA proposal establishes a clear, time-bound obligation for Hungary. The regulation stipulates that "where data centre capacity is being deployed within the territory of a Member State, that Member State shall designate at least one data centre acceleration zone ('acceleration zone') within its territory by [date of entry into force plus 6 months]."

This creates a firm timeline for Hungarian policymakers. Once the regulation enters into force, the Hungarian government has a six-month window to map out strategic infrastructure plans and legally designate these zones. The regulation does not mandate a specific number of zones beyond the minimum of one, leaving room for Hungary to designate multiple zones if its national strategy and capacity deployment plans warrant it. However, the designation is not arbitrary; it is a conditional obligation triggered by the actual deployment of capacity.

The Eight Mandatory Selection Criteria

The designation of an acceleration zone in Hungary must be based on a comprehensive assessment of eight specific aspects outlined in Article 10(1)(a)-(h). For CTOs, investors, and site selectors, these criteria serve as the primary filter for viable locations. Any site failing to meet these conditions would likely be ineligible for designation as an acceleration zone.

Site Dimensions and Facility Size: Authorities must consider the location and dimension of the site, as well as the minimum and maximum size of facilities that could be built. This ensures that designated zones can accommodate the scale of modern data centre projects, which often require significant land footprints for cooling and expansion.
Power Grid Capacity: A fundamental enabling condition is the availability of current and future power grid capacity. Article 10(1)(b) explicitly requires consideration of the possibility and conditions for on-site storage and clean energy generation. This implies that zones will likely be clustered near existing grid substations or areas with planned grid reinforcements capable of supporting high-density compute loads.
Network Connectivity: Similar to power, the availability of current and future network connectivity capacity is a mandatory consideration. This ensures that low-latency requirements for AI and cloud workloads can be met, a critical factor for Hungary's competitiveness in the AI ecosystem.
Legacy Network Phasing Out: The zone must support the phasing out of legacy copper networks. This criterion aligns with broader digital infrastructure modernisation goals, ensuring that new data centres are built on modern, high-speed fibre backbones rather than outdated infrastructure.
Waste Heat Reuse: Article 10(1)(e) requires consideration of available facilities that can reuse data centre waste heat. This criterion strongly influences zone selection, favouring urban or semi-urban areas with district heating systems or industrial processes that can utilise excess thermal energy. This transforms data centres from energy consumers into potential energy providers for local communities.
Permitting Acceleration Measures: Authorities must evaluate the measures taken to accelerate permit granting. This includes assessing local administrative capacity and the existing regulatory framework for construction and operation. A zone cannot be designated if the local bureaucracy cannot support the streamlined processes envisioned by CADA.
Brownfield Preference: Crucially, Article 10(1)(g) mandates a preference for reusing brownfield sites over using greenfield sites. This environmental directive significantly narrows the pool of eligible locations, likely excluding pristine rural areas in favour of former industrial zones, brownfields, or underutilised urban plots. This is a deliberate policy choice to prevent urban sprawl and promote sustainable land use.
Sustainability and Climate Resilience: The site must be able to function sustainably, preventing or minimising environmental impacts, supporting carbon emission reduction, and demonstrating climate resilience. This ensures that the acceleration of data centre deployment does not come at the cost of environmental degradation.

Energy Planning and Grid Integration

Beyond the initial designation, Article 10(2) imposes ongoing obligations on Hungary to facilitate the development of these zones. The government must conduct a comprehensive analysis of the energy needs and their respective impacts on greenhouse gas emissions for current and future acceleration zones. This analysis must be reviewed at least every three years.

This requirement is not merely bureaucratic; it directly impacts grid planning. Article 10(2)(b) mandates that national network development plans prepared by transmission and distribution system operators must take due account of this energy analysis. This ensures that grid investments are anticipatory, accommodating the high power density of data centres. For investors, this provides a degree of certainty that grid capacity will be planned in parallel with data centre construction, mitigating one of the most significant bottlenecks in the sector.

Sustainability Conditions and KPIs

Article 11 of the CADA proposal sets the conditions within acceleration zones, focusing heavily on sustainability and fair competition. When setting sustainability requirements for data centres deployed in these zones, Hungary must use the key performance indicators (KPIs) specified in Delegated Regulation (EU) 2024/1364, pursuant to Directive (EU) 2023/1791.

It is important to note that these KPIs are not enumerated in CADA itself. Instead, CADA explicitly references the existing Delegated Regulation (EU) 2024/1364, which defines metrics such as Power Usage Effectiveness (PUE), Water Usage Effectiveness (WUE), and carbon emissions. This means that not every data centre project can claim the benefits of an acceleration zone. Projects must align with these EU-wide sustainability standards. The regulation aims to prevent a "race to the bottom" where Member States might lower environmental standards to attract investment. Instead, CADA harmonises sustainability expectations, ensuring that accelerated permitting is granted only to projects that meet high environmental benchmarks.

Furthermore, Article 11(2) requires that the allocation and use of resources within acceleration zones take place on fair, reasonable, and non-discriminatory terms. This provision is designed to prevent speculative reservation of resources or foreclosure practices that could impede effective competition. For SMEs and new market entrants, this offers protection against dominant players monopolising grid capacity or land in designated zones through long-term, non-binding reservations.

Strategic Projects and Additional Criteria

While Article 10 and Article 11 govern the general framework of acceleration zones, Article 14 introduces a mechanism for the Commission to designate specific data centre projects as "strategic projects." These projects must fulfil at least two of several criteria, including:

Supporting essential public sector functions (e.g., healthcare, research).
Including highly sustainable or innovative features.
Contributing to grid security and stability.
Integrating Union-designed chips, processors, or accelerators.
Addressing major shortages of compute capacity in underserved areas.

Although the Commission designates these strategic projects, the underlying location must still fall within the broader national planning framework established by Article 10. This creates a two-layered system: national zones provide the geographic and regulatory foundation, while EU-level strategic designation provides additional support and visibility for projects of particular importance to the Union's digital sovereignty.

What this means for you

For CTOs, architects, and SMEs evaluating the practical impact of CADA in Hungary, the designation of acceleration zones represents both a constraint and an opportunity.

Site Selection Strategy: Your site selection process must now prioritise brownfield locations with existing or planned grid reinforcements and district heating infrastructure. Greenfield sites in rural areas, while potentially offering more space, are less likely to be designated as acceleration zones due to the brownfield preference in Article 10(1)(g) and the lack of waste heat reuse opportunities. Focus your scouting on former industrial zones near major urban centres like Budapest, Debrecen, or Szeged, where grid capacity and connectivity are more robust.

Permitting and Timelines: Once Hungary designates its acceleration zones, data centre projects within these zones will benefit from streamlined permitting processes. Article 13 (referenced in the broader context of acceleration zones) facilitates administrative and permit-granting processes, potentially reducing approval times to 12 months from the moment a comprehensive application is submitted. However, this benefit is contingent on the project meeting the sustainability KPIs of Article 11. Ensure your technical designs incorporate energy-efficient cooling, renewable energy integration, and waste heat recovery to qualify for these accelerated procedures.

Competitive Positioning: The fair and non-discriminatory resource allocation requirement in Article 11(2) is a safeguard for smaller players. It prevents large incumbents from locking up grid capacity or land without building. As an SME, you can leverage this provision to challenge any perceived unfair practices in resource allocation within acceleration zones. Additionally, the preference for Union-designed hardware in strategic projects (Article 14) may open doors for partnerships with European hardware providers, potentially offering competitive advantages in procurement and innovation grants.

Long-Term Planning: The requirement for Hungary to review energy needs every three years (Article 10(2)(a)) means that the infrastructure landscape will evolve. Stay engaged with national energy planning discussions to anticipate where future grid reinforcements will occur. Aligning your expansion plans with these national energy strategies will reduce the risk of capacity bottlenecks and ensure long-term operational viability.

Common misconceptions

Misconception 1: The EU will choose the locations of acceleration zones. Reality: CADA does not designate specific geographic locations. Article 10 places the obligation on Member States, meaning the Hungarian government will decide where to place acceleration zones based on national criteria. The EU sets the rules and deadlines, but national authorities execute the designation.

Misconception 2: All data centre projects in Hungary will automatically benefit from accelerated permitting. Reality: Accelerated permitting and streamlined processes are specifically tied to projects deployed within designated acceleration zones. Projects outside these zones may not benefit from the same level of administrative facilitation. Furthermore, projects must meet the sustainability KPIs of Article 11 to fully leverage these benefits.

Misconception 3: Greenfield sites are equally viable as brownfield sites. Reality: Article 10(1)(g) explicitly states a preference for reusing brownfield sites over using greenfield sites. This regulatory preference makes greenfield sites less attractive for designation as acceleration zones, potentially leading to longer permitting times or increased scrutiny for projects on greenfield land.

Misconception 4: Hungary has already designated its acceleration zones. Reality: As CADA is a proposal, Hungary has not yet designated its acceleration zones. The designation must occur within six months of the regulation's entry into force. Until then, no specific zones are legally recognised under the CADA framework, and existing national permitting processes remain in effect.

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