In Portugal, installed IT power capacity could increase 44-fold to over 1.5 GW in the next 5 years, making it one of the fastest expansions currently unfolding in Europe, as per estimates published by Portugal DC, the country’s European Data Centre Association representative.

Once operational, the boom in IT capacity would place the Iberian country solidly on the continent’s digital infrastructure map, even if it remains far smaller than its hyperscale transatlantic neighbour.

Portugal’s leading project is currently the 1.2 GW Start Campus development in Sines – a vast site marketed as a southern European gateway for cloud and AI workloads.

Microsoft has already committed EUR 10bn to the site, choosing to invest in a facility where the groundwork was already underway rather than building from scratch. The result, a giant colo-hyperscaler set to deliver its first 60 MW by October 2027.

SIN01 and SIN02 are just the first phase of a much bigger project, comprising six data centre buildings, which will eventually deliver up to 1.2 GW.

Yet Luís Pedro Duarte, the president of Portugal DC, is quick to warn against an over-concentration. “No one should be putting all their eggs in the same basket,” he argues.

Even a project of START campuses’ scale, he says, cannot underpin Portugal’s digital infrastructure economy, adding that diversification is key.

Indeed, Portugal’s expansion is not limited to a single campus. Equinix is developing its second Lisbon facility (LS2), backed by an initial investment of around EUR 50m.

Merlin–Edged, AtlasEdge, and Digital Realty are all advancing projects around Lisbon, while Quetta eyes a 60 MW site, Voltekko a 6 MW facility in Alcochete, and Portuguese telco MEO is preparing a new data centre in Porto after its parent company, Altice Portugal, sold its Covilhã site for EUR 120m to Asterion Industrial Partners earlier this year.

Digital Realty, in particular, is close to acquiring a brownfield data centre shell formerly owned by IBM and later Kyndryl, a spin-off from the American technology giant. The Lisbon site is already built – an advantage in a country where permitting is still hazy. Two additional Digital Realty projects are also set to be scaled up in the city.

Geography trumps scale

Portugal’s appeal does not come down to size alone. “We don’t have the scale of the US – that’s not the point,” says Duarte. Instead, the country sits astride key submarine-cable routes linking Europe, Africa and Latin America.

The Azores, far closer to North America than London (nine volcanic islands that sit roughly 2,400 miles east of the US and 930 miles west of Lisbon), host critical landing points for cables, including the new Google ‘Sol’ system.

Sines itself already connects to EllaLink, one of Europe’s densest intercontinental cable hubs.

Power, at least on paper, is another Iberian advantage – though available capacity has certainly been overestimated. According to Duarte, Portugal’s Government has said there are requests totalling 26 GW, though most in the industry know this figure to be unrealistic.

“No one in Europe has 20 GW of energy to give out,” Duarte says. Much of the announced capacity is speculative, and this will only draw in projects without bankable investors or viable grid connections.

In December 2025, Decree-Law No.125/2025 was created as a tool to regulate such requests and mitigate other risks in EU nations.

However, what is clear is that power availability varies by location, and that latency – particularly between Lisbon and Sines – may prove to be more constraining to deliver than anticipated.

Portugal’s energy mix is relatively green, which helps multinational firms meet their sustainability targets. Yet even if there is relatively affordable renewable power, improvements must still be made to ensure an effective delivery.

Regulation continues to prevail as a barrier

If there is one ongoing constraint, it comes down to administration rather than electrical power. Across Europe, local authorities often struggle to grasp what data centres do, let alone how to license them.

Portugal has recently updated its framework law governing major infrastructure projects, with secondary regulation still under consideration. Whether this streamlines or complicates approvals remains to be seen.

Portugal DC argues that the solution lies in coordination between industry leaders and legislators. The association has published a joint report with PB7 and the EUDCA calling for clearer rules, a single industry voice and closer engagement with policymakers. Without this, Duarte warns, bottlenecks could emerge even if investment flourishes.

Furthermore, the stakes remain high. Over the next five years, the data centre sector in Portugal is bracing for EUR 13bn worth of investment, a EUR 3.7bn boost to GDP, and almost 10,000 jobs.

Some of this growth will be centred in major cities, while others will crop up in former coal-production areas, land around Abrantes, and Porto-based assets could still be snapped up as operators look to reshuffle their portfolios in the new year.

The major cloud giants – AWS and Microsoft to name just two – have not announced full hyperscale builds beyond the START campus. However, further data centre growth across the country, coupled with healthy investment packages from foreign investors, may be enough.

Portugal may never rival Northern Virginia, but as Europe’s digital doorway, it does not need to.