Irish developer Echelon Data Centres is accelerating its European expansion with a strategy that prioritises having a backup against the oversaturated grid.

With a privately developed energy infrastructure model and a new EUR 2bn JV with Iberdrola, the company is positioning itself to deliver at a time when access to stable and scalable power has become the defining competitive variable in the sector.

Deputy CEO David Smith, who joined the company in February from private equity firm Starwood Capital Group, said the sector’s rapid shift to hyperscalers and AI-driven load demand has fundamentally changed what it means to be a developer.

“When I started investing in the sector in 2019, a 17 MW project was considered very large,” Smith said.

“Today we’re talking about hundreds of megawatts, in some cases up to a gigawatt on a single site. The scale of occupational demand from customers has increased dramatically.”

Smith, who launched Starwood’s European data centre investment strategy before joining Echelon, said the company has had to evolve quickly to keep pace.

Unlike other developers, Echelon leans heavily on building its own power infrastructure, forming energy partnerships with SSE in 2020 and Iberdrola only last month.

The company is also focused on expanding into markets like Spain – it boasts the lowest power costs in Europe – and Italy, where there is more fruitful renewable capacity, better grid access, and the opportunity to elevate them as Tier I players.

Energy infrastructure is a prerequisite, not an add-on

Ireland has become something of a case study for regulation. Under current policy, developers must build their own supporting energy infrastructure before gaining access to a grid connection. Even when granted, the capacity can vary and is heavily reliant on offshore wind as a power source.

“As developers, we have to be cognisant of the way in which national imperatives fold into the space – and as you decarbonise the grid, the volatility increases, which means you need storage and peaking capabilities to manage system stability,” Smith said.

“Data centres can play a meaningful role in balancing those peaks and troughs.”

Echelon’s DUB20 project in Arklow, County Wicklow, illustrates the integrated model the company is advancing. Just an hour south of Dublin Airport, phase one of DUB20 will deliver 90 MW of capacity, while a planning application is in progress to increase capacity to 204 MW.

While its power stems from the national grid, it also features up to 1 GW of renewable power connected to the on-site sub-station.

Echelon estimates the Arklow campus will generate around EUR 4.2bn in economic impact, and the SSE joint venture extends the model further by integrating shared offshore-wind-linked infrastructure into the development.

“It’s a complicated regulatory picture, and you need a much broader skillset today as a developer than you did even three or four years ago,” Smith said.

“We’re effectively operating at the intersection of energy infrastructure, regulatory alignment and hyperscale delivery.”

Echelon continues to scale its Irish portfolio: DUB50 (Kilmeaden) is progressing through the permitting process, DUB40 (Grange Castle, Dublin) broke ground on its shell and core in late November, DUB30 (Kish, County Wicklow) is set to provide 150 MW IT capacity, while DUB20 will scale to 200 MW. DUB10 (Clondalkin, Dublin), with an IT capacity of 90 MW+, remains the only fully operational site in the DUB cluster.

Elsewhere, Echelon will build a EUR 3bn data centre campus with 250 MVA capacity in Milan, and is embarking on the Iberdrola JV to develop hyperscale data centres in Spain, starting with a 144 MW project dubbed Madrid Sur, in Madrid.

Meanwhile, UK projects include LCY10 in London and an LCY20 campus (30 MW), which is currently under construction in Chesham.

Moreover, one blessing and curse of the Irish data centre market is the workforce, Smith explains. The country benefits from an array of skilled contractors; however, retaining those workers remains a constant challenge.

“The domestic workforce is very well developed, but Ireland exports a significant share of that expertise to the Nordics, Spain and the UK,” Smith said. “So the constraint isn’t capability – it’s retention.”

A strategic Iberdrola JV

The company’s JV with Iberdrola marks another strategic shift, giving Echelon deeper access to renewable resources in Spain, which Smith praised as offering “the lowest cost of power across Europe.”

“We have a very large pipeline – more than 2 GW across the UK, Ireland, Spain and Italy – and what’s most important is that we have the ability to deliver,” Smith said.

Spain benefits from a “very sophisticated labour pool” and a strong track record in renewable investment, according to Smith..

Echelon’s Madrid Sur, just south of the city, is already progressing – it will eventually have a processing capacity of 144 MW, for which it has secured an electricity connection of 230 MW.

The partnership also aligns with shifting customer behaviour. After two years of supply-chain volatility and uncertainty, Smith said large cloud and AI clients are once again starting to come to terms with longer delivery periods regarding data centre builds.

“We saw this in 2022 and 2023,” he confirmed. “I think we’re returning to it now.”

Italy will eventually enter the Tier I space

Echelon’s push into Italy is anchored in Milan, acquired because it offered something increasingly rare in many EU markets: “Milan is growing from a Tier II market to a Tier I relatively quickly,” Smith said.

“We think that market is going to grow very dynamically over the next couple of years, and we’re happy to be a part of that”.

The Milan facility, LIN10, is a medium industrial asset with its own energy use and substation.

“Because we build our own energy infrastructure in Ireland, we know how difficult these things are. That allowed us to identify this opportunity quickly, and it’s put us much higher up the queue in terms of who can actually deliver for customers,” Smith said on the project.

Smith refused to discuss capex but said that there had been cost pressures over the years, particularly for data centre components. This, he said, was something he believed was now stabilising in the last couple of months.

Echelon will continue to operate across four core markets – Ireland, the UK, Spain and Italy – and aims to position itself where power availability, adjacency to renewables, and customer demand intersect. The developer is not planning to develop in any new areas at present, Smith confirmed.

*This story was originally published exclusively for NPM subscribers.