Summary Under the proposed Cloud and AI Development Act (CADA), the European Commission is the sole authority empowered to designate "data centre strategic projects." This designation is made by means of a decision following open calls for expressions of interest, as explicitly set out in Article 14(1) of the proposal. Member States designate acceleration zones, but only the Commission can grant strategic project status to specific infrastructure initiatives.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, establishes a dual-track framework to accelerate data centre deployment: national "acceleration zones" and EU-level "strategic projects." While Member States have the power to designate geographic zones, the specific designation of individual projects as "strategic" is a Union-level competence reserved for the European Commission.

The Exclusive Power of the Commission

Article 14(1) of the CADA proposal clearly delineates the authority: "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."

This provision establishes three critical elements of the process:

  1. The Actor: The European Commission acts as the sole designating body.
  2. The Instrument: The designation takes the form of a formal decision.
  3. The Mechanism: Selection occurs exclusively via open calls for expressions of interest.

This centralised approach ensures that strategic projects are identified based on Union-wide prioritiesβ€”such as reducing compute capacity gaps, enhancing energy grid stability, or fostering technological sovereigntyβ€”rather than fragmented national interests. The Commission acts as the gatekeeper, evaluating applications against harmonised criteria to ensure that designated projects deliver tangible "Union added value."

The Selection Criteria

To be designated as a strategic project, an applicant must demonstrate that their project fulfils at least two of the five criteria listed in Article 14(1). These criteria are designed to address specific market failures and strategic gaps:

  • Public Sector Support: The project establishes infrastructure supporting essential public functions, including research, education, healthcare, public safety, and security.
  • Sustainability and Innovation: The project incorporates highly sustainable or innovative features, such as technologies developed under the CADA's Cloud and AI Leadership Initiatives (e.g., energy-efficient cooling or waste heat reuse).
  • Grid Stability: The project contributes to the security, safety, and stability of the electricity grid, particularly by integrating large clean energy generation or storage facilities.
  • Supply Chain Sovereignty: The project supports the integration of chips, processors, accelerators, servers, or quantum computers designed and/or manufactured in the Union, thereby strengthening the semiconductor and data centre supply chains.
  • Capacity Gap Reduction: The project addresses a major shortage of compute capacity in an area identified as underserved and contributes significantly to local economic growth.

The Application and Decision Process

The process is not automatic; it requires active participation from data centre operators. The Commission initiates the process by publishing open calls for expressions of interest. Applicants must submit a proposal containing "all the necessary and relevant information to demonstrate that the project fulfils the relevant criteria."

Once the Commission evaluates the applications, it issues a decision designating the selected projects. This decision is binding and confers specific legal status on the project.

Duration and Withdrawal of Status

The designation is not permanent. Article 14(3) stipulates that the duration of the strategic project status is based on the predicted lifetime of the project. Applicants are required to substantiate this predicted lifetime in their proposal, which then determines the duration of the designation.

Furthermore, Article 14(4) provides a mechanism for accountability. The Commission may withdraw the designation by means of a decision if:

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

Projects that lose their status forfeit all rights connected to that designation under the Regulation.

What this means for you

For data centre operators, investors, and public authorities, understanding the Commission's exclusive role is vital for strategic planning.

1. For Data Centre Operators and Investors

  • Active Application Required: You cannot wait for a national authority to label your project "strategic." You must monitor the Commission's open calls for expressions of interest and submit a robust application demonstrating compliance with at least two of the Article 14(1) criteria.
  • Evidence Burden: The proposal requires detailed substantiation. You must provide concrete evidence regarding your project's contribution to grid stability, its use of Union-manufactured hardware, or its role in addressing capacity shortages.
  • Lifecycle Planning: Since the designation duration is tied to the project's predicted lifetime, your business case and technical projections must be realistic and well-documented to secure a long-term status.

2. For Public Authorities and Planners

  • Coordination with National Zones: While Member States designate acceleration zones (Article 10), the strategic projects within them are selected by the Commission. Local planners should align their zone designations with the Commission's upcoming open calls to ensure their zones attract strategic project applications.
  • Permitting Synergies: Designated strategic projects benefit from the "toolbox" of accelerated permitting under the environmental assessment Regulation referenced in CADA. Authorities should prepare to fast-track permits for projects once the Commission issues its designation decision.
  • State Aid Compliance: While designation facilitates access to support measures, it does not bypass State aid rules. Public support for these projects must still be notified to and approved by the Commission under Articles 107 and 108 TFEU.

3. For the Wider Ecosystem

  • Supply Chain Opportunities: Projects focusing on the integration of Union-manufactured chips and servers (Criterion 14(1)(d)) are explicitly prioritised. This signals a strong policy direction for suppliers of European hardware to align their offerings with the needs of potential strategic projects.
  • Grid Integration: The emphasis on grid stability (Criterion 14(1)(c)) suggests that projects co-located with renewable energy generation or storage will have a competitive advantage in the selection process.

Common misconceptions

"Member States designate strategic projects."

  • Fact: This is incorrect. Member States designate data centre acceleration zones (geographic areas) under Article 10. Only the European Commission designates data centre strategic projects (specific infrastructure initiatives) under Article 14.

"Large data centres are automatically strategic."

  • Fact: Size is not a criterion. A project must fulfil at least two of the specific strategic criteria in Article 14(1) and be selected through the Commission's open call process. A massive data centre that does not contribute to grid stability, public functions, or Union supply chains would not qualify.

"Designation guarantees public funding."

  • Fact: Designation grants the possibility of support measures and accelerated permitting, but it does not automatically grant financial subsidies. Any public funding must still comply with EU State aid rules and be approved separately.

"The status is permanent once granted."

  • Fact: The status is tied to the project's predicted lifetime and ongoing compliance. Under Article 14(4), the Commission can withdraw the designation if the project fails to meet criteria or if the application contained incorrect information.

Related

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