Summary The proposed Cloud and AI Development Act (CADA) does not pre-select specific geographic coordinates for data centre acceleration zones in Latvia. Instead, Article 10 imposes a binding obligation on the Latvian government to designate at least one such zone within six months of the Regulation's entry into force, provided data centre capacity is being deployed in the country. The final location will be determined by national authorities based on strict criteria, including grid capacity, connectivity, waste-heat reuse potential, and a mandatory preference for brownfield sites. Once designated, these zones must adhere to sustainability Key Performance Indicators (KPIs) defined in Delegated Regulation (EU) 2024/1364 and ensure fair, non-discriminatory resource allocation under Article 11.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, represents a significant shift in how the EU approaches the physical deployment of digital infrastructure. Rather than the European Commission micromanaging site selection across 27 Member States, the proposal establishes a framework where national authorities bear the responsibility of identifying and formally designating "data centre acceleration zones." For Latvia, this means the specific locations of future high-capacity data centres will be a matter of national strategic planning, constrained by a rigorous set of EU-wide criteria designed to ensure sustainability, grid stability, and market fairness.

The Obligation to Designate

The core mechanism for accelerating data centre deployment is found in Article 10(1) of the proposal. This article mandates 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."

For Latvia, this creates a clear timeline and a mandatory action. The designation must occur "by [date of entry into force of this Regulation plus 6 months]." This deadline is not a suggestion; it is a legal requirement intended to prevent delays in the rollout of critical compute capacity. The obligation is conditional only on the fact that data centre capacity is being deployed in the country. Given Latvia's existing digital infrastructure ambitions and the growing demand for AI compute, this condition is highly likely to be met, triggering the six-month clock for the Latvian government to identify and legally declare its acceleration zone(s).

The designation process requires the definition of the zone's "location and dimension," as well as the "minimum and maximum size of the facilities that could be built on that site" (Article 10(1)(a)). This ensures that the zones are not merely abstract concepts but concrete, actionable areas with defined physical boundaries and capacity limits.

Selection Criteria: The Article 10 Checklist

The choice of location for Latvia's acceleration zone(s) will not be arbitrary. Article 10(1) provides a comprehensive, non-exhaustive list of aspects that national authorities must consider. For Latvian planners, investors, and developers, these criteria will effectively act as a filter for site selection. The following factors from Article 10(1)(a)–(h) will be decisive:

  • Grid Capacity and Energy Storage: The zone must possess "available and future power grid capacity." Crucially, authorities must also assess "the possibility and conditions for on-site storage and clean energy generation" (Article 10(1)(b)). This is a critical factor for Latvia, where the integration of renewable energy sources and the stability of the national grid are paramount for supporting the high energy loads of modern data centres.
  • Network Connectivity: The location must offer "available and future network connectivity capacity" (Article 10(1)(c)). High-speed, low-latency connections are prerequisites for data centre operations. In the Latvian context, this will likely prioritize areas with robust fiber optic backbones or proximity to major submarine cable landing points, ensuring the zone can support the data-intensive needs of AI and cloud services.
  • Waste Heat Reuse: The zone must have "available and future facilities that can reuse data centre waste heat" (Article 10(1)(e)). This criterion aligns with the EU's broader sustainability goals, encouraging data centres to function as heat sources for district heating systems in urban areas. For Latvia, this could mean prioritizing sites near existing district heating networks or industrial zones capable of absorbing thermal output.
  • Brownfield Preference: A significant constraint on site selection is the instruction that Member States shall give "preference for reusing brownfield sites over using greenfield sites" (Article 10(1)(g)). This suggests that former industrial, commercial, or contaminated sites in Latvia may be prioritized over undeveloped agricultural or natural land. The goal is to minimize environmental impact, repurpose existing infrastructure, and reduce the ecological footprint of new construction.
  • Sustainability and Climate Resilience: The site must be able to "function sustainably, particularly as regards preventing or minimising environmental impacts and supporting the reduction of carbon emissions and its climate resilience" (Article 10(1)(h)). This requires a holistic assessment of the site's long-term viability in the face of climate change and its ability to operate with minimal carbon emissions.
  • Legacy Network Phasing: The zone's capacity to "support the phasing out of legacy copper networks" is also a consideration (Article 10(1)(d)). This aligns with the EU's push for gigabit connectivity and the modernization of telecommunications infrastructure.
  • Permitting Acceleration: Authorities must consider "all the measures taken to accelerate the granting of the necessary permits for constructing and operating data centres within the given zone" (Article 10(1)(f)). This criterion ensures that the designated zone is not just a piece of land, but a regulatory environment designed for speed and efficiency.

Conditions Within the Acceleration Zone

Once a zone is designated, it is subject to specific operational conditions outlined in Article 11. These conditions ensure that the rapid deployment of data centres does not come at the expense of environmental standards or fair competition.

Sustainability KPIs: When setting sustainability requirements for data centres deployed in acceleration zones, Latvia must use the key performance indicators (KPIs) specified in Delegated Regulation (EU) 2024/1364, pursuant to Directive (EU) 2023/1791. This Delegated Regulation establishes a common Union rating scheme for data centres, covering metrics such as Power Usage Effectiveness (PUE), water usage effectiveness, and carbon emissions. By mandating these KPIs, CADA ensures a standardized, high level of energy efficiency across all EU acceleration zones. It is important to note that these specific KPIs are not enumerated in the CADA text itself but are referenced from the existing Delegated Regulation, ensuring technical consistency with current EU standards.

Fair Resource Allocation: Article 11(2) requires 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 (such as land, grid connections, or cooling capacity) and foreclosure practices that could impede effective competition or delay the development of the zone. For Small and Medium-sized Enterprises (SMEs) and smaller operators in Latvia, this offers a crucial safeguard against being locked out by larger incumbents who might otherwise hoard capacity.

Energy Needs Analysis and Grid Planning

Beyond the initial designation, Article 10(2) imposes ongoing obligations on Latvia. The Member State 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 conducted at least when designating the zones and reviewed at least every three years.

The results of this analysis must be integrated into national network development plans, ensuring that grid operators plan for the anticipated load increases from data centres. This proactive planning is crucial for preventing grid bottlenecks and ensuring that new data centres have reliable power access. The analysis must also consider the "potential of anticipatory investments to accommodate future system needs," encouraging grid operators to build capacity ahead of demand rather than reacting to it.

What this means for you

For CTOs, architects, data centre operators, and SMEs evaluating the practical impact of CADA on their operations in Latvia, the designation of acceleration zones represents both a significant opportunity and a set of new strategic constraints.

Site Selection Strategy: If you are planning to build or expand data centre capacity in Latvia, you must monitor the Latvian government's upcoming designation of acceleration zones closely. Building within a designated zone offers significant advantages, including streamlined permitting processes (as outlined in Article 13, which limits permit-granting procedures to 12 months for projects in these zones). However, your site selection must align with the criteria in Article 10(1). For instance, if you are considering a greenfield site, be aware that brownfield sites are preferred. If your site lacks clear pathways for waste-heat reuse, sufficient grid capacity, or the ability to phase out legacy copper networks, it may not be selected as an acceleration zone. Projects outside these zones may face longer, more complex permitting timelines and lack the specific support structures of the acceleration framework.

Sustainability Compliance: Architects and engineers must design data centres to meet the KPIs from Delegated Regulation (EU) 2024/1364. This is not optional for projects in acceleration zones. You should integrate energy-efficient cooling systems, waste-heat recovery mechanisms, and renewable energy strategies into your designs from the outset. Failure to meet these sustainability standards could jeopardize your project's eligibility for the benefits of the acceleration zone or lead to compliance issues. The focus on "energy and resource efficiency by design" means that retrofitting later may not be sufficient.

Resource Allocation and Competition: For SMEs, the requirement for fair, reasonable, and non-discriminatory resource allocation in Article 11(2) is a positive development. It aims to prevent larger players from monopolizing grid connections or land within acceleration zones. However, you should remain vigilant and engage with national authorities to ensure that resource allocation processes are transparent and that you have equitable access to the infrastructure you need. The "fair, reasonable and non-discriminatory" standard is a legal shield against market foreclosure.

Engagement with Authorities: Given the requirement for Latvia to conduct energy needs analyses and integrate them into national grid plans (Article 10(2)), stakeholders should actively participate in these consultations. Providing input on your projected energy demands, timelines, and technical requirements can help ensure that grid infrastructure is developed in a way that supports your projects. The analysis is a living document, reviewed every three years, offering multiple opportunities for industry input.

Common misconceptions

Misconception 1: CADA tells Latvia exactly where to build data centres. Reality: CADA does not designate specific sites or provide a map of coordinates. It imposes an obligation on Latvia to designate at least one acceleration zone where data centre capacity is being deployed. The actual location is determined by Latvian authorities based on the criteria in Article 10(1), such as grid capacity, brownfield preference, and sustainability.

Misconception 2: Any data centre project in Latvia can automatically claim acceleration zone benefits. Reality: Benefits such as streamlined permitting (12-month limit), single information points, and access to strategic project designation are specifically tied to projects located within officially designated acceleration zones. Projects outside these zones may not benefit from the same accelerated timelines and support structures.

Misconception 3: Sustainability requirements are vague and optional. Reality: Article 11(1) mandates the use of specific KPIs from Delegated Regulation (EU) 2024/1364. These are concrete, measurable standards for energy and resource efficiency (e.g., PUE, WUE). Compliance is a condition for operating within an acceleration zone, not a voluntary best practice.

Misconception 4: Only large hyperscalers can operate in acceleration zones. Reality: Article 11(2) explicitly requires fair, reasonable, and non-discriminatory resource allocation. This provision is designed to protect competition and ensure that SMEs and smaller operators have access to resources within acceleration zones, preventing foreclosure by larger incumbents. The framework aims to create a level playing field.

Related

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